Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues and an intensifying conflict in the Middle East.

A sustained surge in oil prices is likely to complicate the U.S. fight against inflation. A $10-a-barrel increase would boost year-over-year growth in the consumer-price index by 0.5 percentage points,

The latest Producer Price Index, a closely watched measurement of wholesale inflation, rose 0.1% in May, lifting the annual rate to 2.6%, according to Bureau of Labor Statistics data released Thursday.

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Treasury yields are higher Friday, with investors calculating that the surge in oil prices could push up overall inflation and make it harder for the Federal Reserve to cut interest rates. While geopolitical instability can sometimes boost Treasurys as investors look to buy safer assets,

Overall, though, the trend for inflation has been a steady decline toward the Federal Reserve’s 2% annual target. The Fed, however, is not expected to change interest rates when it meets next week.