The University of Michigan’s preliminary survey for May showed that year-ahead inflation expectations are now at 7.3%, up from 6.5% in April. Both Democrats and Republicans contributed to the increase in expectations. In addition, long-run inflation expectations increased to 4.6%, up from 4.4 in April and “reflecting a particularly large monthly jump among Republicans.”
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In contrast, the April consumer price index (CPI) report showed inflation increasing by 2.3% year-over-year, the lowest growth since February 2021.
Final May Numbers Will Reveal Effect of China Tariff Pause
The University of Michigan will release its final May numbers on Friday, May 30, which will reflect the effect of the U.S. implementing a tariff reduction pause on China in inflation expectations. The preliminary May Index of Consumer Sentiment was 50.8, the second-lowest reading on record and below the expectation for 53.4.
Surprisingly, the SPDR S&P Retail ETF (XRT) is still continuing to move higher on the news.
