According to a recent research note from TD Cowen analysts, the May inflation report is expected to reflect the initial impact of recent tariffs, as businesses start passing on higher costs to consumers. The analysts anticipate that the most significant price increases will occur over the summer months, as companies and retailers exhaust their existing low-cost inventories and face the full financial burden of the tariffs.
For April, TD Cowen analysts predict that core inflation will remain relatively low. This is primarily due to a decline in travel and hotel prices, along with elevated inventory levels at retail stores, which are helping to keep costs stable for the time being. However, this temporary relief is expected to fade as the effects of tariffs become more pronounced.
The analysts also emphasize the challenges facing consumers, who are already under financial strain. Shoppers will likely have to navigate either higher prices driven by the new tariffs or increased costs from shipping surcharges that businesses may introduce to offset their rising expenses. This combination of pressures could make it increasingly difficult for consumers to manage their budgets in the months ahead.
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