CPA Analysis: US inflation rate remains lower than predicted
Latest consumer price data shows negligible tariff impact
Washington. The latest Consumer Price Index (CPI) data released today shows the US economy continuing to experience low inflation. Year-on-year inflation for May 2019 came in at only 1.8 percent, according to the Bureau of Labor Statistics (BLS). In the view of the Coalition for a Prosperous America (CPA), this low rate is further confirmation that the tariffs imposed by the Trump administration have not led to the price increases many predicted. Said CPA Chief Economist Jeff Ferry, “The tariffs on Chinese imports, like the tariffs on certain global imports, are not generating any significant inflation, but they are stimulating US production in many important industries. The critics who use statistical methods to identify price increases are crying wolf when there is no wolf anywhere in sight. In other words, no real evidence of price increases.”
BLS data reveals that core inflation clocked 2.0 percent in May—lower than many analysts had expected. And in vehicle manufacturing—a sector that consumes plenty of tariffed steel and aluminum—new car and truck prices actually fell 0.1 percent in May. Overall, the annual price index for vehicles is up a mere 0.9 percent, which means that vehicle production is actually putting downward pressure on overall core inflation.
In other tariffed sectors, a similar picture emerges. Despite projections of heavy price increases for furniture and bedding, for example, prices rose only 2.4 percent in the year to May. And while washing machine prices initially rose after tariffs were applied last year, May laundry equipment prices were actually down 1.6 percent compared to a year ago.
Overall, goods inflation actually ran negative in May, down 0.2 percent from May 2018. However, inflation in the Services category (not including energy services) rose by 2.7 percent.
Said Ferry, “Tariffs are implemented to counter unfair trading practices and to stimulate domestic production. With manufacturers adding jobs, and consumers not facing additional costs, it’s clear they are working. It’s troubling to see media coverage of misleading estimates of higher costs and prices, when actual price data is freely available.”
Click here to read CPA’s full analysis of the latest CPI data.
Melissa Tallman, Marketing and Communications Director
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