ROCHESTER, N.Y. – The U.S. inflation report for May came out Wednesday and it showed inflation mostly holding steady. Prices actually fell in some categories that are expected to be impacted by tariffs.
While economists exhale each month, there isn’t a spike in inflation, they’re not breathing easily just ye. That’s because it usually takes several months for price increases driven by tariffs to fully materialize.
May inflation is at 2.4% up just slightly from 2.3% in April.
In May, the prices of both new and used cars decreased as well as clothes and furniture. Much of that inventory is imported so economists expect prices to rise in the coming months.
We saw some notable increases at the grocery store. The prices of eggs, coffee, ground beef, roast and some produce increased.
The chief economists at Moody’s told CNBC we’re seeing quote “the calm before the inflation storm.”
But consumers are feeling a bit better about the prospect of buying a house. Fannie Mae’s Home Purchase Sentiment Index rose last month. Almost a third of consumers said they expect mortgage rates to go down. But about the same number believe rates will go up. Nevertheless, the numbers show consumers are less pessimistic about the housing market.
But something good is developing because of tariffs. General Motors has announced plans to invest about $4 billion in U.S. manufacturing plants, shifting some of its production from Mexico. The Chevy Blazer and Equinox will eventually be made in America. The current GM plant in Spring Hill, Tennessee will start producing the Blazer and another plant in Kansas City, Kansas will begin producing the Equinox. The move of production from Mexico to the U.S. is expected to be complete in two years.
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