The May Consumer Price Index (CPI) came in cooler than expected, defying fears that the impact of President Trump’s tariffs would start to show a rise in prices.
A separate analysis by the Footwear Distributors and Retailers of America (FDRA) indicates that footwear prices in May likewise declined year-over-year. The reports raise questions about whether a price increase will occur this summer, as expected by the Federal Reserve and private-sector economists.
Gary Raines, chief economist at the FDRA, continues to expect the higher duties hitting footwear imports to translate into higher prices.
“There is mounting evidence upstream in the supply chain of surging average duties per pair on footwear imports,” said Raines in a statement obtained by SGB Executive. “These higher duties soon may push the average landed cost of footwear imports sharply higher, which in turn may pressure retail footwear prices to climb later this year.”
Through the first five months of the year, however, footwear prices have declined. Raines sees the decline “as part of a broader issue of easing inflation and declining apparel prices, with the subset footwear just along for the ride.”
In May, retail footwear prices slid 1.6 percent from a year ago, the steepest drop in over four years, according to the FDRA’s analysis. Men’s footwear prices led the decline, falling 2.4 percent, marking the largest year-over-year decline in four and a half years. Women’s shoe prices declined 1.5 percent, the steepest in eight months. Kid’s footwear prices slipped 0.5 percent in May and have now declined in eleven of the last fifteen months.
Overall, May’s declines indicate that year-to-date footwear prices are modestly lower than those of the same first five months of last year.
The Labor Department’s Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose 0.1 percent in May versus April 2025, following a 0.2 percent month-over-month increase in April. Economists polled by Reuters had forecast the CPI to climb 0.2 percent month-over-month.
Year-over-year (y/y) inflation was 2.4 percent, in line with expectations and near the four-year low recorded in April. Year-over-year inflation gained 2.3 percent in April.
U.S. consumer prices increased less than expected in May, partly due to lower energy prices, with gas prices dropping 2.6 percent compared to the prior month. President Trump’s economic advisers have argued that the impact of tariffs would be milder than economists are expecting because energy prices have been declining this year.
Also holding back inflation is the average rent increase of only 0.2 percent, which pushes down the annual increase to 3.8 percent, the smallest since January 2022. Lower rents for new leases are finally being reflected in rates for existing tenants. However, the tariff-related price hikes for items such as cars and apparel, which many economists expected to appear in the May Consumer Price Index numbers, had not yet materialized.
Apparel prices, for instance, declined 0.4 percent in May versus April and were down 0.9 percent year-over-year. Comparing May prices to April, used car and truck prices decreased 0.5 percent, while those for new vehicles eased 0.3 percent. Prices for household furnishings and operations rose 0.3 percent on a month-to-month basis.
Economists say inflation has been slow to respond to President Trump’s sweeping tariffs as most retailers continue to sell merchandise accumulated before the import duties took effect. Some retailers front-loaded orders ahead of anticipated tariff increases to avoid the duties.
Wells Fargo had also previously forecasted that many companies would likely absorb some of the costs or hold off on price increases in the uncertain demand environment and as they await White House negotiations with foreign countries.
Inflation is still expected to heat up from June and throughout the second half of the year, offsetting the tariff costs. However, economists expect prices to rise incrementally to avoid a price shock for consumers or the attention of the White House.
In the active lifestyle space, Nike, Adidas, Puma, and Brooks have each indicated that they have or would raise prices as part of tariff-mitigation steps, while several larger U.S. chains, including Walmart and Best Buy, have stated that price hikes are inevitable.
Jonathan Pingle, chief U.S. economist of UBS’s investment banking division, told the Wall Street Journal that another likely factor in the muted inflation figures for May was that certain shipments were exempt if they were already in transit at the time the Trump Administration enacted the tariffs.
“We’ve been assuming the bulk of increases from tariffs wouldn’t start to show up until summer,” Pingle said. “Just because we haven’t seen it yet doesn’t mean we won’t see it eventually. This doesn’t mean we’re out of the woods yet.”
Daniel Hornung, a senior fellow at MIT, told Reuters, “This report is another indicator that, before tariffs and economic uncertainty, we were well on our way to inflation falling back to target and that the main impediment to future progress is tariff-related price increases.”
Nationwide Economist Oren Klachkin wrote to clients, as reported in USA Today, “We expect to see a stronger and broader pass-through (of tariff) over the summer.”
On Wednesday, June 11, Trump stated that a U.S.-China trade deal, which will unlock critical minerals for U.S. manufacturers, was “done.” But duties on Chinese imports would still be much higher than in January.
Prices did rise for some items exposed to tariffs. Prices for major appliances surged 4.3 percent, the most significant gain since August 2020, likely reflecting the first round of duties on steel and aluminum. Toy prices increased 1.3 percent, the largest increase since February 2023. Prescription medication prices increased by 0.6 percent. Food prices rebounded 0.3 percent after dipping 0.1 percent in April.
On Truth Social, President Trump touted the CPI report and said it should prompt the Fed to aggressively cut rates: “GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT,” he wrote.
