United States: Tariff increases suggest increased pressure on price rises
2025-05-06
■ The manufacturing input price index has reached a two-year high, indicating upward price pressure caused by tariffs.
■ Consumer confidence has declined for four consecutive months, while inflation expectations have risen to a multi-decade high, reflecting growing concerns about stagflation.
The preliminary PMI released in April showed that the US economy has diverged due to the impact of tariff policies. The composite index stood at 51.2, down 2.3 percentage points from the previous month, marking a new low in one year and four months. In terms of internal metrics, the service industry index fell sharply to 51.4, a decrease of 3.0 percentage points from the previous month, while the manufacturing industry index rebounded slightly to 50.7, an increase of 0.5 percentage points from the previous month, reflecting companies' tendencies to rush to buy and place orders in advance of the tariff increase. Additionally, the input price index of the manufacturing sector rose to its highest level in nearly two years, demonstrating strong cost pressure and indicating that the trend of rising prices is intensifying.
On the other hand, the final value of the University of Michigan Consumer Confidence Index in April was 52.2, revised up from the initial value, but still down 4.8 percentage points from the previous month, marking the fourth consecutive month of decline. The survey was conducted at the time the US announced the imposition of tariffs on one another, resulting in a notable dampening of consumer confidence. Although short-term inflation expectations have decreased from the initial value, the one-year expectation remains high at 6.5%, the highest since 1981; the five-year expectation is at 4.4%, the highest level since 1991. Consumers are increasingly concerned about the risk of stagflation, where prices rise while the economy slows down. The ongoing rise in inflation expectations has also introduced uncertainty into future monetary policy pathways.
■ Consumer confidence has declined for four consecutive months, while inflation expectations have risen to a multi-decade high, reflecting growing concerns about stagflation.
The preliminary PMI released in April showed that the US economy has diverged due to the impact of tariff policies. The composite index stood at 51.2, down 2.3 percentage points from the previous month, marking a new low in one year and four months. In terms of internal metrics, the service industry index fell sharply to 51.4, a decrease of 3.0 percentage points from the previous month, while the manufacturing industry index rebounded slightly to 50.7, an increase of 0.5 percentage points from the previous month, reflecting companies' tendencies to rush to buy and place orders in advance of the tariff increase. Additionally, the input price index of the manufacturing sector rose to its highest level in nearly two years, demonstrating strong cost pressure and indicating that the trend of rising prices is intensifying.
On the other hand, the final value of the University of Michigan Consumer Confidence Index in April was 52.2, revised up from the initial value, but still down 4.8 percentage points from the previous month, marking the fourth consecutive month of decline. The survey was conducted at the time the US announced the imposition of tariffs on one another, resulting in a notable dampening of consumer confidence. Although short-term inflation expectations have decreased from the initial value, the one-year expectation remains high at 6.5%, the highest since 1981; the five-year expectation is at 4.4%, the highest level since 1991. Consumers are increasingly concerned about the risk of stagflation, where prices rise while the economy slows down. The ongoing rise in inflation expectations has also introduced uncertainty into future monetary policy pathways.