May's Consumer Price Index (CPI) is expected to show prices increased at a slightly faster clip than in April. The report, due Wednesday at 8:30 a.m. ET, comes as investors closely watch for any signs that President Trump's tariffs are impacting what consumers pay.

According to Bloomberg data, headline inflation is expected to have accelerated slightly to 2.4% in May from 2.3% in April, which marked the lowest yearly increase since February 2021. Month-over-month prices are estimated to rise 0.2%, matching April's increase. On a "core" basis, which excludes volatile food and energy costs, CPI is expected to have risen 2.9% over the past year in May, a slight acceleration from April's 2.8%.

Monthly core price increases are anticipated to rise 0.3%, ahead of April's 0.2%. The report reflects the time period about a month after Trump's "Liberation Day" tariff announcements shook markets and businesses. Since then, many reciprocal tariffs have been paused, but the 10% baseline duties for most countries remain in place.

Mexico and Canada continue to face fentanyl-related tariffs, and industry-specific tariffs on steel, aluminum, and autos remain unchanged. Tariffs on China remain significant, with the effective tariff rate on Chinese goods hovering around 30%. "May's CPI report will be an important test of the speed and magnitude to which higher tariff rates are being passed along to the consumer," said the Wells Fargo economics team, led by Sarah House, in a preview note.

House expects a modest rise in overall and core inflation from higher goods prices but doesn't foresee a big jump in this report. Still, economists there say the risk of higher prices later this year remains, a view shared by many on Wall Street. Read more: How to protect your savings against inflation May's CPI report reflects a time period in which many of Trump's tariffs were in effect.

(Reuters/Evelyn Hockstein) · REUTERS / Reuters "Going forward, the impact of tariffs will likely provide a somewhat larger boost to monthly inflation, and we expect monthly core CPI inflation of around 0.35% over the next few months," Jan Hatzius of Goldman Sachs wrote, noting a "sharp acceleration" in most core goods categories but limited impact on core services inflation, at least in the near term. Meanwhile, BNP Paribas said that although May's core inflation reading could register its strongest monthly gain since Q2 2023, hotter prints are expected in June and July. According to BNP, price increases from tariffs typically appear two to three months after implementation.

However, broader uncertainty about the timing and impact of tariff-related price changes has weighed on the outlook.