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Inflation edged up in May, with the key inflation gauge rising to 2.3% year-over-year, slightly exceeding the Federal Reserve's target. Core inflation also increased to 2.7%. Simultaneously, consumer spending dipped for the first time since January, falling 0.1%, while incomes dropped 0.4%. These decreases were partly attributed to one-time factors like tariff-related car purchases and Social Security benefit adjustments. However, the data suggests cooling growth as consumers curtail spending due to increased prices from tariffs. Retailers like Nike and Walmart anticipate passing increased costs onto consumers.

Prepared by Christopher Adams and reviewed by editorial team.