In May 2023, the year-over-year inflation rate rose to 2.4%, slightly lower than the anticipated 2.5%, marking a reversal of the previous decline in inflation rates this year. Economists and firms, including Morgan Stanley, highlighted the expectation of tariff-driven inflation, with the Federal Reserve's Beige Book confirming upward pressures on costs due to tariffs. Federal Reserve chair Jerome Powell noted that the impact of tariffs could be temporary or persistent, affecting economic growth and employment rates. The small business sector also reported growing uncertainty due to changing tariff policies.
The year-over-year inflation rate increased to 2.4% in May, reversing the year's cooling trend and raising concerns about tariff effects on prices.
Federal Reserve chair Jerome Powell warned that sustained tariff increases could lead to higher inflation, slower growth, and increased unemployment, indicating long-term economic implications.
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