US consumers likely faced slightly faster inflation in May, notably for merchandise, as businesses gradually pass along higher tariffs, Bloomberg reported on Sunday, citing a survey of economists.
The survey showed that prices of goods and services, excluding volatile food and energy costs, rose 0.3 percent in May, the most in four months. Some economists said that some firms are passing through tariffs costs in categories like furniture, apparel, and auto parts, according to Bloomberg. This is another sign showing that American consumers have been forced to bear the additional costs from tariffs, resulting in higher prices for imported goods, such as clothing and electronics, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Sunday.The Bloomberg survey adds to a growing number of signs that show the negative impact of the US tariff policies on its own consumes and businesses. St Louis Fed President Alberto Musalem also warned that US rate-setters would face uncertainty "right through the summer," the Financial Times reported on Saturday. Musalem said that while the tariffs could boost inflation for "a quarter or two," there was "an equally likely scenario where the impact of tariffs on prices could last longer."A survey released by the New York Fed earlier in June showed that most businesses passed on at least some of the higher tariffs to their customers, with nearly one-third of manufacturers and about 45 percent of services firms fully passing along all tariff-induced cost increases by raising their prices.Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, said that as tariffs raise costs for raw materials and intermediate goods, squeezing corporate profits, businesses are also forced to pass the additional costs onto consumers. "Businesses may increase prices to cope with the growing costs that would worsen inflation, while reduced investment and supply chain risks harm long-term competitiveness," Wang told the Global Times on Sunday. In addition to impact on costs, the US tariffs are also reportedly hurting US jobs. US job growth moderated and prior months' numbers were revised lower, and nonfarm payrolls increased 139,000 in May after a combined 95,000 in downward revisions to the two previous months, Bloomberg reported on Friday, following the US employment report for May.Zhou highlighted the impact of rising pressure on US domestic employment, as the decline in enterprises' demand leads to fewer job opportunities. "Without employment, American consumers' purchasing power is further impaired," Zhou said.Chinese officials have repeatedly criticized various US tariffs for harming others, while not benefiting itself. In the latest instance, asked to comment on the US' decision to further hike tariffs on steel, aluminum and related products, He Yongqian, a spokesperson for the Chinese Commerce Ministry, said on Thursday that the US move not only hurts others and itself, but also be unhelpful in maintaining industrial security. It will also seriously disrupt the stability of the global industrial chain and supply chain, the spokesperson said, noting that the US approach has been opposed by many countries.
