U.S. consumer spending unexpectedly falls in May, inflation rises modestly

Odaily Planet Daily News U.S. consumer spending unexpectedly fell in May as the boost from advance purchases before tariffs faded and inflation growth remained mild. Data on Friday showed that consumer spending, which accounts for more than two-thirds of economic activity, fell 0.1% last month, while the market expected a 0.1% increase. After the rush of advance shopping disappeared, consumer spending almost stagnated last quarter. Service spending also decreased, resulting in a quarterly increase of only 0.5%, the lowest since the second quarter of 2020. The data indicates a weak consumption growth path in the second quarter. Weak consumption and mild inflation are still not enough to prompt the Federal Reserve to resume interest rate cuts in July. Economists pointed out that the current mild inflation is due to companies still selling inventories hoarded before tariffs took effect, and inflation is expected to start to rise from the June CPI data. Nick Timiraos, the "Federal Reserve mouthpiece", said that U.S. core commodity prices rose 0.24% in May, and except for the decline in March, they have risen sharply every month this year. The housing sector rose 0.26%, the largest mild increase since November. Core service prices (excluding housing) rose 0.13%, the third consecutive mild reading. (Jinshi)