Donald Trump hailed the latest US inflation data as “great numbers” and said the Federal Reserve Board should cut interest rates by a full percentage point. His treasury secretary attributed the better-than-expected numbers to the administration’s policies. The declarations of victory were premature on both counts.

The Fed will ignore Trump, as usual. It isn’t going to cut US rates when it meets next week and Scott Bessent’s attempt to claim credit for the inflation numbers ignores the fact that they are part of a lengthy trend towards the Fed’s 2 per cent target for inflation that began in the second half of 2022, during Joe Biden’s presidency.

The chaos he has unleashed in the months of his presidency is yet to show up in economic data. That could be about to change. Credit: Bloomberg

Nothing the Trump administration has done in the first chaotic months of his presidency would yet have had a material impact on inflation, although that might change quite soon.

The May data was, however, better than economists had forecast, with headline inflation edging up 0.1 percentage points from April and down 0.9 percentage points from May last year. “Core” inflation (excluding volatile food and energy prices) was steady month-on-month but had fallen to 2.8 per cent from 3.4 per cent last May.

Market economists, expecting that the first signs of Trump’s tariffs would show up in the numbers, had anticipated a month-on-month increase of 0.2 percentage points in headline inflation and 0.3 percentage points for core inflation.

That the tariffs had minimal impact shouldn’t have been a surprise.

Not only have they been messily implemented, with some on pause for 90 days (until July 9), some amended and the crucial tariffs on China bouncing around like yo-yos, but US importers have also pre-emptively acted to prepare for them.

There was a big surge in imports to the US in March, to record levels, after Trump announced tariffs (on steel, aluminium and autos) in February. Imports, however, fell away sharply in April and US and Chinese ports data showed a dramatic plunge in imports from China, in particular, in May.

The March surge has been attributed to “front-loading,” or........

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