Financial institutions seeking guidance amidst the release of fresh inflation figures
Stock market reactions varied on Wall Street following the U.S. inflation report for May. The Dow Jones Industrial Average dropped slightly, opening at 42,820 points, while the S&P 500 remained steady at 6,043 points. The Nasdaq inched up to 19,762 points.
Consumer prices rose by 2.4 percent year-on-year, according to a report by the Labor Department. This was slightly lower than the 2.5 percent expected by economists polled by Reuters. Despite this, some experts found the report to be better than expected, suggesting a remote possibility of U.S. Federal Reserve interest rate cuts later this year. However, concerns about potential long-term implications of U.S. tariffs on inflation remain.
Shares of Tesla gained 2.3 percent, with CEO Elon Musk softening his stance in a dispute with U.S. President Donald Trump and setting the first public rides of the company's self-driving robotaxis for June 22 in the U.S. GameStop, on the other hand, fell by more than 3 percent due to weak demand for physical games and a plunge in quarterly revenue.
Tariffs can have significant impacts on potential long-term inflation, effectively raising the cost of imported goods, leading to higher production costs and, ultimately, higher consumer prices. This is particularly relevant in the context of the U.S. housing market and broader economic conditions. Essential construction materials like lumber, steel, aluminum, and appliances are subject to these tariffs, which can increase construction costs and home prices.
The unpredictable nature of tariffs can introduce economic uncertainty, affecting investment decisions and potentially dampening economic growth. Over the long term, businesses and consumers may adapt to higher costs by changing supply chains or consumption patterns, but this process can take time and may not fully mitigate inflationary effects.
(Reporting by Zuzanna Szymanska, editing by Sabine Ehrhardt. For further queries, please contact our newsroom in Berlin under [email protected] (for politics and economics) or [email protected] (for companies and markets).)
[1] Tariff rates and affected goods information based on Trade Partnership Worldwide LLC data as of June 2023.[2] Inflation data as reported by the U.S. Bureau of Labor Statistics for May 2025.[3] Inflationary effects analysis based on research by the Federal Reserve Bank of San Francisco and the Congressional Budget Office as of June 2025.
Technology can play a crucial role in mitigating the inflationary effects of tariffs by aiding businesses in adapting their supply chains. For instance, advancements in finance and investing could help companies invest in more cost-effective alternatives for essential materials like lumber, steel, aluminum, and appliances. Furthermore, as the business sector becomes more digital, investments in technology may help consumers adjust their consumption patterns, thus reducing the impact of tariffs on prices.
