Evelyn Reynolds

The consumer price index increased 0.1% for the month, putting the annual inflation rate at 2.4%.
Excluding food and energy, core CPI came in respectively at 0.1% and 2.8%, compared to forecasts for 0.3% and 2.9%.
Weakness in energy prices helped offset some of the increases, and a handful of other key items expected to show tariff-related jumps, vehicle and apparel prices in particular, actually posted declines.

Consumer prices rose less than expected in May as President Donald Trump’s tariffs had yet to show significant impact on inflation, the Bureau of Labor Statistics reported Wednesday.
The consumer price index, a broad-based measure of goods and services across the sprawling U.S. economy, increased 0.1% for the month, putting the annual inflation rate at 2.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 2.4%.

Excluding food and energy, core CPI came in respectively at 0.1% and 2.8%, compared to forecasts for 0.3% and 2.9%. Federal Reserve officials consider core a better measure of long-term trends, with several expressing concerns recently over the impact that tariffs would have on inflation.
The all-items annual rate marked a 0.1 percentage point step up from April while core was the same.
Continued weakness in energy prices helped offset some of the increases, and a handful of other key items expected to show tariff-related jumps, vehicle and apparel prices in particular, actually posted declines.

Energy slipped 1% on the month, while new and used vehicle prices posted respective declines of 0.3% and 0.5%. Within energy, gasoline posted a 2.6% drop that took the year-over-year decrease to 12%.
Food increased 0.3% as did shelter, which the BLS said was the “primary factor” in the otherwise modest CPI increase. Egg prices fell 2.7% but were still up 41.5% from a year ago. Apparel posted a 0.4% drop.

Though shelter prices rose on the month, the 3.9% annual increase is the lowest rate since late-2021.
With the modest inflation moves, real average hourly earnings increased 0.3% for the month and were up 1.4% from a year ago.
“Today’s below forecast inflation print is reassuring – but only to an extent,” said Seema Shah, chief global strategist at Principal Asset Management. “Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize.”
Stock market futures turned positive after the report while Treasury yields were lower.
Echoing Trump, Vice President JD Vance, in a post on X, called on the Fed to cut interest rates as inflation pressures have failed to materialize.
“The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice,” Vance wrote.

Trade tensions persist

The BLS report comes with the Trump administration continuing in efforts to negotiate trade deals. In his April 2 “liberation day” announcement that rocked financial markets, Trump slapped 10% universal duties on U.S. imports and a host of other so-called reciprocal tariffs on countries he said have been using unfair trading practices.
Most recently, White House officials have met with Chinese leaders in an effort to defuse a blistering trade war between the two nations. Leaders from both countries have said they are near an agreement on rare-earth materials, such as resources needed for automotive batteries, as well as technology-related items.
Other nations hit with reciprocal duties have until early July to strike a deal, according to an announcement Trump made a week after the initial move.
White House officials insist that tariffs will not cause runaway inflation, with the expectation that foreign producers would absorb much of the costs themselves. Many economists, though, believe that the broad-based nature of the duties could raise prices in a more pronounced fashion, with greater impacts likely to show up through the summer as inventories amassed ahead of the tariff implementation draw down.
The benign May inflation readings suggest “the tariffs aren’t having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand,” said Alexandra Wilson-Elizondo, global CIO of multi-asset solutions at Goldman Sachs Asset Management. “While we might see some price increases on goods later, service prices are expected to remain stable, suggesting any rise in inflation is likely to be temporary.”
Market pricing indicates the Fed is unlikely to consider further interest rate cuts until at least September as policymakers evaluate the impact that tariffs expert on inflation. Trump has been urging the Fed to lower rates amid the easing inflation readings and signs of a slowdown in the labor market.

Changes in data collection

Evaluating the inflation numbers has been complicated by other Trump initiatives.
In an effort to pare down the federal workforce, the administration has instituted a hiring freeze that has coincided with the BLS restricting its data collection and expanding a process called imputation, in which it uses models to fill in incomplete data. For instance, the BLS said last week that as of April it has been “reducing sample in areas across the country” and suspended collection altogether in Lincoln, Neb.; Provo, Utah; and Buffalo, N.Y.
“The use of expanded imputation is likely to continue, given ongoing staffing shortages at the BLS. While it is difficult to conclude any kind of directional effect, smaller sample sizes may be liable to greater volatility,” BNP Paribas analysts said in a note.
However, the BLS said the moves to suspend collections will have “minimal impact” on overall data collection, though they could impact subindexes. More

The World Bank sharply cut its global economic growth projection Tuesday to 2.3% in 2025.
“This would mark the slowest rate of global growth since 2008, aside from outright global recessions,” the World Bank said.
It also cut its 2025 growth forecast for the U.S. by 0.9 percentage points to 1.4%, and reduced its euro area GDP expectations by 0.3 percentage points to 0.7%.

Cargo shipping containers are loaded with cranes on container ships at the Burchardkai container terminal at the harbour of Hamburg, northern Germany, on June 3, 2025.
Fabian Bimmer | Afp | Getty Images

The World Bank sharply cut its global economic growth projections Tuesday, citing disruption from trade uncertainty in particular.
It now expects the global economy to expand by 2.3% in 2025, down from an earlier forecast of 2.7%.

“This would mark the slowest rate of global growth since 2008, aside from outright global recessions,” the Bank said in its Global Economic Prospects report.
Trade uncertainty, especially, has weighed on the outlook, the World Bank suggested.
“International discord — about trade, in particular — has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II,” Indermit Gill, senior vice president and chief economist of The World Bank Group, said in the report.
It also cut its 2025 growth forecast for the U.S. by 0.9 percentage points to 1.4%, and reduced its euro area GDP expectations by 0.3 percentage points to 0.7%.
The Bank noted that an escalation of trade tensions could push growth even lower, but the picture could improve if major economies strike lasting trade agreements.

“Our analysis suggests that if today’s trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, 2025, global growth could be stronger by about 0.2 percentage point on average over the course of 2025 and 2026,” Gill said.
The U.S. and many of its trading partners are currently in negotiations after U.S. President Donald Trump imposed steep tariffs on numerous countries in April. This week, for example, the U.S. and China are meeting in London after the two countries agreed to temporarily reduce levies following talks in May.
Negotiations are also still ongoing between the U.S. and European Union with less than a month to go before previously announced tariffs are set to come into full force.
In cutting its global growth expectation, the World Bank follows various other bodies, including the Organisation for Economic Co-operation and Development, which also cited the fallout from trade and tariff-related uncertainty as the key factor.
The OECD said earlier this month that it was expecting global growth to slow to 2.9% in 2025, also caveating its forecast with the potential for future tariff developments. It had previously forecast global growth of 3.1% this year. More

Bulgaria is set to become the 21st member of the euro zone.
The eastern European country last week received the sign off to join the bloc from the European Commission and European Central Bank.
Economists and experts weighed in on the potential risks, outlining what Bulgaria could lose and gain from the move.

A person beats a drum with the euro logo crossed out in red on the drumhead during a demonstration against Bulgaria entering the Eurozone in Sofia on May 31, 2025.
Nikolay Doychinov | Afp | Getty Images

Bulgaria is set to become the 21st member of the euro zone after receiving sign off from the European Commission and European Central Bank last week — but not everyone is convinced the move is a good idea.
Bulgaria’s Prime Minister Rosen Zhelyazkov, member of the center-right GERB party, has made joining the euro zone a priority, arguing that it would boost economic stability and growth.

However, fears of higher prices and a loss of independence have stoked nationalist-party fueled protests against the country’s euro ascension. A recent European Union survey showed that half of Bulgaria’s population is against adopting the euro.
Economists and experts weighed in on the potential risks to Bulgaria joining the euro, outlining what the eastern European country could lose and gain from the move.

Inflation and interest rates

“The most immediate concern is a spike in prices during the currency switch, as some businesses may round up prices. Many Bulgarians worry that eurozone membership could erode their purchasing power, especially in poorer rural areas,” Valentin Tataru, an economist at ING who covers Bulgaria, told CNBC.
Nevertheless, he also noted Bulgaria’s currency has long had a fixed exchange rate to the euro and therefore, “the transitional inflation bump should be mild.”

The euro zone is ready for a new member: Bulgaria

The second key concern is what giving up Bulgaria’s currency, the lev, will mean for the country’s independence and sovereignty — ideals for which it has become symbolic according to Andrius Tursa, central and eastern Europe advisor at Teneo.

“Its replacement with the euro may be perceived by parts of the population as a loss of national control,” he told CNBC. In addition there are concerns about relinquishing control of monetary policy as countries in the euro zone are subject to decisions by the ECB, Tursa added.
The Bulgarian National Bank (BNB) would for example no longer solely be responsible for setting the country’s interest rates based only on how its individual economy is developing.
However, “eurozone countries benefit from lower interest rates due to the credibility of the ECB and reduced currency risk,” Tursa pointed out. Lower interest rates typically benefit borrowers as loans and mortgages become more affordable.

Economic stability and power

Joining the euro zone and securing oversight from the ECB could boost economic stability and growth prospects for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, told CNBC.
Foreign investment could for example increase, she suggested, and the country’s gross domestic product would be expected to be boosted by euro zone membership.
“Deeper financial integration would strengthen Bulgaria’s financial system under the ECB’s oversight, enhancing monetary stability,” Groeschl explained. “Adopting the euro would strengthen Bulgaria’s ties with the EU, enhancing its influence and credibility,” she added.
Key areas that underpin the economy like trade and tourism could also be supported, Teneo’s Tursa said.

Many of Bulgaria’s key trading partners are in the EU, with most of its exports going to members of the 27-state bloc in 2023 according to data from the country’s statistics office. Key sectors include machinery and transport equipment, manufactured goods and food.
Tourism has meanwhile become a major contributor to the economy as Bulgaria positions itself as both a summer and winter destination. Over 13 million foreigners visited the country in 2024, official statistics showed.
“Bulgaria’s accession to the eurozone would facilitate trade and tourism flows with other eurozone countries by eliminating the costs and burden associated with currency conversion,” Tursa said, adding that this would be particularly important due to Bulgaria’s strong integration into EU supply chains.

Political tensions

One risk flagged by the economists and analysts are the political tensions surrounding Bulgaria’s euro adoption.
“Public opposition to euro adoption has already triggered notable protests, and in the medium term, the issue could become a key driver of rising support for populist and Euroskeptic political movements,” Teneo’s Tursa explained.
But despite local protests and concerns about euro zone ascension, at least in the long term the benefits for the country outweigh any negatives, Allianz SE’s Groeschl argued.
“The trade-off involves losing some economic autonomy in exchange for deeper integration,” she said. “Although Bulgaria would lose some monetary policy control and be subject to strict fiscal rules, the advantages of greater economic stability, reduced transaction costs and stronger integration with the EU market would typically outweigh these disadvantages.”
ING’s Tataru struck a similar tone, saying that because the lev is already tied to the euro, there should not be a major shock.
“Joining the euro is one of the most strategic steps Bulgaria can take to secure long-term prosperity and deeper European integration,” he said. More

Less than 30% of CEOs see either a mild or severe recession taking place over the next six months, per Chief Executive Group’s latest survey.
That’s well below the more than 60% who sad the same in April as tariffs put businesses on high alert.

Alexander Spatari | Moment | Getty Images

Business leaders are walking back recessionary expectations for the U.S. that initially spiked in the aftermath of President Donald Trump’s tariff announcement, according to data released Monday.
Less than 30% of CEOs forecast either a mild or severe recession over the next six months, per Chief Executive Group’s survey of more than 270 taken last week. That’s down from 46% who said the same in May and 62% in April.

The share of CEOs polled this month who said they expect some level of growth in the U.S. economy also shot up above 40%. That’s nearly double from the 23% who gave the same prediction in April.

Expectations for flat economic growth have surged in recent months, rising above 30% from 15% in April. That comes as some market participants question if “stagflation” — a term used to described an environment with stagnating economic growth and sticky inflation — could be on the horizon.
Chief Executive’s latest data reflects a shifting outlook among corporate America’s leaders as they follow the evolving policy around Trump’s tariffs. Many large companies have left their earnings outlooks unchanged, citing the uncertainty around what the president’s final trade policy will and will not include.
Trump sent U.S. financial markets spiraling in April after first unveiling his plan for broad and steep levies on many countries and territories, which market participants worried would hamper consumer spending. He placed many of those duties on pause shortly after, which helped the market recoup much of its losses.
The White House has been negotiating deals with countries during this reprieve, which is set to expire early next month. The Trump administration announced an agreement with the United Kingdom and is holding talks with China in London on Monday.

Recession talk

Talk of an economic slowdown has once again become a hot topic in corporate America. “Recession” and similar iterations of the word have come up on 150 S&P 500-listed earnings calls so far this year, about double the amount seen in the same period of 2024, according to a CNBC analysis of FactSet data.
“We do recognize that sweeping changes in global trade policy could contribute to broader macroeconomic volatility, including the potential to tip certain regions into a recession,” said Michael DeVeau, finance chief at International Flavors & Fragrances, on the company’s earnings call last month.

Firms have raised alarm that tariffs could hit their bottom lines and that they will need to pass down higher costs by raising prices. Some also said rising fears of a recession because of the levies have pushed consumers to tighten their belts financially.
The University of Michigan’s closely followed consumer sentiment index has plunged near its lowest levels on record as the tariff announcements rattled everyday Americans.
However, a New York Federal Reserve survey released Monday paints a brighter picture. The data showed that the average consumer is growing less concerned about inflation after Trump walked back some of his most severe trade plans.
“From the macro, the worst concerns, I think, have passed,” Home Depot CEO Edward Decker said last month. “We’ve gone from a dynamic of where we were going to have a near certain recession and stock market correction in early April, to where today stock markets fully recovered (and) recession expectations are way down in the past month.” More