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Global Consumer and Economic Trends in May 2025: Inflation, Spending, and Market Highlights

General Report May 31, 2025
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TABLE OF CONTENTS

  1. US Consumer Spending and Inflation Dynamics
  2. UK and European Food Inflation Trends
  3. Southeast Asia’s Rising Grocery Burden
  4. Emerging Market Economic Performances
  5. Southeast Asia Energy and Agricultural Collaboration
  6. Business and Technology Spotlights
  7. Conclusion

1. Summary

  • As of late May 2025, global consumer dynamics and market indicators present a multifaceted landscape influenced by varying pressures across different regions. In the United States, consumer spending has decelerated, rising only 0.2% in April 2025 after a more robust 0.7% increase in March. This slowdown is largely attributed to tariff-related anxieties that have prompted households to hold back on discretionary spending, despite a moderate easing of inflation. The Personal Consumption Expenditures (PCE) Price Index recorded a 12-month inflation rate of 2.1%, the lowest level since September 2024, signaling potential relief for consumers. However, the negative sentiment reflected by the ANZ-Roy Morgan Consumer Confidence Index indicates an overall cautious stance among American households as they brace for sustained pricing pressures stemming from tariffs and rising food costs.

  • In the UK and Europe, food prices have surged, leading to significant challenges for households and retailers alike. The UK has witnessed an upward trajectory in food inflation, with fresh food prices, particularly red meat, exerting considerable pressure. Retailers face operational cost increases driven by new legislation and rising employer contributions, prompting a reevaluation of pricing strategies. Meanwhile, the European Central Bank is contemplating potential rate cuts in response to inflationary pressures emerging from Southern European countries like Italy and Spain, indicating the delicate balance between fostering growth and managing inflation.

  • Southeast Asia reveals its own unique set of challenges, particularly in Malaysia, where consumers confront the highest grocery expenditures in the region. Consistent inflation rates and a reliance on food imports compound this burden, as external economic factors and local production inefficiencies create a volatile situation for households. Despite these challenges, India stands out with a remarkable 7.4% growth in GDP for Q1 2025, driven by robust construction and manufacturing outputs. As such, India’s economic resilience presents a stark contrast to the challenges faced by many neighboring economies in Southeast Asia.

  • To address these challenges, strategic initiatives are underway. In the energy and agricultural sectors, collaborations between countries—such as Malaysia’s renewed commitment to agricultural cooperation with Thailand and Singapore's plans to import solar power from Indonesia—underscore a proactive approach to mitigating rising costs and enhancing food security. Moreover, technological advancements from AI alignment methods to innovations in information retrieval further illustrate the importance of continued investment in technology as a fundamental component in responding to and navigating these economic shifts.

2. US Consumer Spending and Inflation Dynamics

  • 2-1. April 2025 consumer spending slowdown

  • In April 2025, US consumer spending exhibited a notable slowdown, rising by merely 0.2% after an increase of 0.7% in March. This deceleration was attributed to anticipatory behaviors surrounding the implementation of tariffs, with consumers reportedly holding back on spending in the face of impending price hikes due to tariff adjustments. The Commerce Department's Bureau of Economic Analysis characterized this period as a transitional phase where prior preemptive purchasing strategies—prompted by fears of elevated prices—suddenly curtailed consumer activity as the reality of increased costs began to influence spending habits. While consumer spending comprises over two-thirds of overall economic activities, the modest growth measured in April suggested a cautious stance among consumers amid broader economic uncertainties.

  • Furthermore, the April data illustrated that the category of services marginally continued to attract consumer dollars, while spending on goods slightly declined by 0.1%. This suggests that households were reallocating their expenditures away from non-essential items, prioritizing essential services as they braced for rising prices across the board.

  • 2-2. Personal income growth and PCE inflation trends

  • Despite the sluggish consumer spending growth, personal income experienced a healthier increase of 0.8% in April. This growth outpaced the inflation rate as measured by the Personal Consumption Expenditures (PCE) Price Index, which showed a 12-month increase of 2.1%, the lowest such figure since September 2024. The moderation in inflation, paired with growing incomes, signified potential relief for households as they navigated financial pressures. Though essential expenditures remained at bay, the increase in personal savings—reaching 4.9%—was an indicator of consumer caution as they eyed the future uncertainties amplified by tariff implications.

  • The PCE inflation rate, particularly, has revealed a cooling trend, dropping from 2.3% in March to 2.1% in April. Additionally, core inflation, which excludes food and energy prices, showed an even sharper decrease to 2.5%, marking a decline from the previous month. This indicates not only a broader retreat of inflationary pressures, but also a significant pivot in consumer price expectations in light of ongoing tariff discussions.

  • 2-3. Tariff impacts and consumer confidence shifts

  • The complexities surrounding consumer confidence were clearly highlighted in recent reports, with many households expressing negative sentiment amid ongoing economic uncertainties fueled by tariffs. The ANZ-Roy Morgan Consumer Confidence Index fell by five points in May to 92.9, signaling a pervasive pessimism about the economic outlook. This decline was compounded by rising food prices, which have historically been a pressure point for consumers. The results indicate that many shoppers are wary of their financial stability, particularly as inflation expectations remain resilient despite falling current inflation rates.

  • As retailers pre-emptively increased prices due to projected tariff impacts, this contributed to an overall climate of caution, with shifts in spending patterns suggesting that households were readjusting their financial strategies. For instance, major retailers such as Walmart and Costco reported plans to raise prices in response to tariff-induced cost increases, evidently reflecting the broader apprehensions about inflation and consumer behavior moving forward.

3. UK and European Food Inflation Trends

  • 3-1. UK food inflation trends through May 2025

  • As of May 2025, the UK experienced a notable increase in food inflation, which rose for the fourth consecutive month, peaking at an annual rate of 2.8%. This increase was primarily driven by escalating costs in fresh food, especially red meat, where wholesale beef prices surged due to a combination of increased demand and lower supply. The British Retail Consortium (BRC) reported that fresh food inflation reached 2.4%, a significant jump from 1.8% in April. In contrast, ambient food inflation saw a slight decline to 3.3% from 3.7% during the same period.

  • These trends indicate a challenging environment for both consumers and retailers. The BRC highlighted that retailers faced mounting operational costs, including an additional £5 billion from rising employer National Insurance contributions and increases to the National Living Wage. Anticipated changes, such as a new packaging tax expected to cost retailers £2 billion and further costs arising from the implementation of the Employment Rights Bill, are likely to exacerbate the situation, pushing food prices higher unless managed effectively.

  • The interplay between supply chain constraints, particularly in the beef market, and consumer demand is crucial in understanding the current inflationary pressures. A reported 5% shortfall in cattle supply alongside a 1% increase in consumer demand has intensified price increases, making it evident that without interventions, the potential for further rises in food inflation remains high.

  • In summary, the continuous rise in food inflation throughout 2025 reflects a complex blend of supply chain challenges, heightened operational costs, and persistent consumer demand, which together suggest a turbulent economic landscape that may require responsive policy measures to alleviate the burden on households.

  • 3-2. Retailers’ cost pressures and supermarket price rules

  • In May 2025, UK supermarkets faced critical cost pressures that complicated their pricing strategies amidst rising food inflation. Retail costs have escalated due to various factors, including increased employer National Insurance contributions and the new National Living Wage requirements. The BRC emphasized that these pressing economic factors have forced retailers to reconsider their pricing structures, especially as they also prepare for an upcoming £2 billion packaging tax.

  • As food prices continue to climb, particularly in fresh produce sectors impacted by beef price surges, the BRC noted that supermarkets now need to absorb these additional costs. This has led to concerns about consumer spending in the coming months, with many retailers feeling the pressure to manage profit margins while remaining competitive. In response, some have begun to implement strategic promotional activities to entice buyers, which may temporarily offset the pain of rising prices at the checkout.

  • However, the sustainability of these promotional measures is in question, especially if consumer confidence remains fragile. Should household spending tighten due to increased expenses elsewhere, such as energy and transportation, retailers may need to strike a delicate balance between maintaining sales and protecting their margins.

  • Overall, the environment for UK retailers in May 2025 is fraught with challenges, underscoring their need for adaptive pricing strategies that can accommodate both rising costs and fluctuating consumer demand.

  • 3-3. ECB rate-cut prospects from Italy and Spain inflation data

  • As of late May 2025, inflationary pressures in the Eurozone, particularly from southern countries like Italy and Spain, have led to discussions regarding potential rate cuts by the European Central Bank (ECB). Rising food prices in these regions, notably affected by supply shortages and agricultural challenges, have resulted in inflation metrics that insist on a policy review from the ECB to ensure economic stability.

  • The discussions are critical as inflation data from Italy and Spain indicate that rising costs could stifle growth and consumer spending. By reviewing policy measures, particularly interest rates, the ECB aims to alleviate financial pressures on households while fostering consumption needed for economic recovery.

  • A careful analysis reveals a pivotal challenge; as food costs increase, core inflation might stabilize, prompting the ECB to reconsider its approach to monetary policy. If food inflation continues to exert upward pressure on overall price levels, the ECB may need to act proactively to avoid derailing the economic recovery across Eurozone nations, reflecting broader implications for economic growth and financial stability in the region.

4. Southeast Asia’s Rising Grocery Burden

  • 4-1. Malaysia’s highest regional grocery expenditure

  • As of 2023, Malaysians have been identified as spending the highest amount on groceries compared to their Southeast Asian counterparts, with annual food-at-home expenses averaging approximately US$1,940 per person. Singapore follows as the second highest at US$1,831. This disparity, as highlighted by data from the U.S. Department of Agriculture (USDA), underscores Malaysia's significant consumer burden due to a number of interconnected factors.

  • 4-2. Drivers of high Malaysian food-at-home costs

  • Several key drivers contribute to Malaysia's elevated grocery expenditures. Firstly, the reliance on food imports plays a critical role in shaping the country’s food prices. As more than 95% of its corn needs and substantial amounts of other food items are imported, any disruptions in supply chains or global market shifts can lead to significant price increases for consumers. Additionally, the weakened Malaysian Ringgit exacerbates these expenses, making imports more costly.

  • Low agricultural productivity and monopolistic practices in food production also contribute to the escalating costs. High input costs for essential items such as fertilizers and animal feed, along with a notable labour shortage in the agricultural sector, have further compounded the challenges faced by Malaysian households. Experts cite the need for a concerted effort from both the government and private sector to bolster local food production, enhancing farm productivity while reducing the impact of monopolies and improving supply chain efficiencies.

  • 4-3. Malaysia’s April 2025 inflation plateau

  • In April 2025, Malaysia's inflation rate recorded a steady growth of 1.4%, maintaining the same pace as March and reflecting slight reductions compared to earlier months in the prior year. This consistency in inflation, particularly within the food and beverage sector where costs increased by an average of 2.3% compared to the previous year, highlights ongoing pressures on Malaysian households.

  • While this relatively low inflation rate appears stable, it coexists with stark realities: consumer prices for essential goods have risen faster than wages, indicating that both purchasing power and living standards may be under strain. As households are facing increasingly higher food prices, fueled by the costs associated with essential ingredients and the reliance on imported feed, the economic outlook suggests a potentially challenging environment ahead if wages do not catch up with inflation.

5. Emerging Market Economic Performances

  • 5-1. India’s 7.4% Q1 2025 GDP Surge

  • India's economy demonstrated a remarkable performance in the first quarter of 2025, achieving a 7.4% year-on-year growth in GDP, a surge that exceeded forecasts significantly. This growth was fueled by robust outputs in key sectors, particularly construction and manufacturing. Notably, the growth rate was comfortably above the anticipated 6.7% increase as projected by analysts through a Reuters poll and marked an improvement from the revised 6.4% growth registered in the preceding quarter.

  • The impressive GDP increase was attributed mainly to a substantial 10.8% rise in construction activities and a 4.8% uptick in manufacturing output during this period. The gross value added (GVA), which serves as a more granular indicator of economic output, grew by 6.8% in the same timeframe. This data indicates not just a recovery but a strengthening of economic fundamentals, setting India apart from other major economies in a globally cautious environment.

  • Amidst this rapid growth, however, there remain cautionary notes. Analysts have pointed to uncertainties stemming from potential tariff disputes, particularly with the United States, which could dampen future growth prospects. Although the Reserve Bank of India projected a growth rate of 6.5% for the fiscal year beginning April 1, 2025, there are concerns that global economic conditions may challenge sustained domestic demand and investment.

  • Despite the challenges posed by external factors, the Indian government has implemented measures that could bolster growth, including tax relief and monetary easing through potential interest rate cuts. Retail inflation, which fell to a near six-year low of 3.16% in April 2025, is expected to stabilize food prices and support consumer spending, which is pivotal as it constitutes a significant portion of the GDP.

  • As of now, economic analysts anticipate that India may stabilize around a growth rate of mid-6% by the beginning of the fiscal year 2026, contingent upon favorable agricultural output, robust domestic demand, and continued public spending initiatives.

6. Southeast Asia Energy and Agricultural Collaboration

  • 6-1. Malaysia-Thailand agricultural cooperation expansion

  • On May 30, 2025, Malaysia's Agriculture and Food Security Minister, Datuk Seri Mohamad Sabu, announced the commitment to renewing the memorandum of understanding (MOU) on agricultural cooperation with Thailand. This collaborative effort has been ongoing for over 50 years and is set to undergo substantial enhancements to better reflect current challenges and aspirations in sustainable agriculture, technology transfer, research, and food security.

  • The bilateral relationship aims to address critical issues such as achieving a higher self-sufficiency level in agricultural production by 2030. This goal is to be accomplished through a more sustainable, resilient, and technology-driven agro-food sector. Minister Sabu highlighted the positive trade performance between the two countries, with the agricultural product trade reaching RM20.96 billion in 2024, indicating robust opportunities for further enhancement in agricultural trade.

  • The recent working visit by Malaysia's delegation to Thailand included discussions on the comprehensive review and improvements of the existing MOU, showcasing both countries' commitment to strengthen ties amidst the complexities of today's agricultural landscape.

  • 6-2. Singapore’s planned 1 GW solar import from Indonesia

  • On May 30, 2025, Singapore moved closer to bolstering its energy security by planning to import up to 1 gigawatt (GW) of solar power from Indonesia. This initiative, part of Singapore's broader strategy to enhance energy stability through cross-border cooperation, received a conditional license from the Energy Market Authority for Singa Renewables Pte Ltd, which is a joint venture involving France’s TotalEnergies SE and Royal Golden Eagle Pte Ltd.

  • This project is especially significant as it highlights Singapore's dependency on imported liquefied natural gas for electricity generation and illustrates its efforts to diversify energy sources. The approval also encompasses plans for a subsea power cable to facilitate the energy transfer, further deepening the collaborative energy framework within the Association of Southeast Asian Nations (ASEAN) region.

  • With ambitious targets to integrate various technologies and energy sources, Singapore aims to import a total of 6 GW of clean power by 2035 from different countries, including previous agreements with Indonesia and new plans to explore wind power imports from Vietnam. These initiatives demonstrate how Singapore is positioning itself within a progressively interconnected ASEAN energy landscape.

7. Business and Technology Spotlights

  • 7-1. April foreign-branded phone sales in China

  • In April 2025, sales of foreign-branded mobile phones in China, including significant figures from Apple, experienced a slight increase as per data from the China Academy of Information and Communications Technology (CAICT). Shipments rose to 3.52 million units, up marginally from 3.50 million units the previous year. Apple's strategy involved offering discounts on its iPhone 16 models—reductions reaching up to 2,530 yuan (approximately US$351). This uptick in sales occurred against a backdrop of a 9% decline in Apple’s phone sales earlier in the year, indicating persistent competition from domestic manufacturers. Despite this minor recovery, Apple continues to face structural challenges in maintaining its market position, especially with competitors like Huawei gaining traction. By Q1 2025, Apple ranked fifth in market share within China, decreasing from a peak of 13.4% in 2015. The increase in April appears to reflect an adjustment in pricing strategy aimed at recovering sales, although the fundamental outlook remains fraught with competition-related challenges.

  • 7-2. Tencent’s AI alignment method without retraining

  • Recent advancements have been made by researchers at Tencent and several universities regarding AI model alignment. A novel method called Hierarchical Mixture-of-Experts (HoE) was developed, allowing large language models (LLMs) to be aligned with multiple user preferences without undergoing traditional retraining processes. This approach resolves limitations often found in existing models that struggle to balance diverse objectives simultaneously. The HoE framework promises greater efficiency and flexibility, which is particularly advantageous for applications such as personalized digital assistants that must adapt to continuously changing user requirements. Importantly, this research challenges the prevailing assumptions in AI regarding the necessity for extensive retraining to cater to differing tasks. Although promising, the effectiveness of the model relies heavily on merging techniques and access to pre-trained single-objective models, which could constrain its applicability in broader scenarios.

  • 7-3. Logical retrieval advances with LOGI COL

  • A significant innovation in information retrieval has emerged from a collaboration between Stanford University, Microsoft, and other institutions, introducing LOGI COL, a method designed to enhance the accuracy of retrieval systems when progressing with complex queries involving logical constructs. Traditional dense retrievers often faltered when faced with queries that include logical connectives, leading to irrelevant or contradictory outcomes. LOGI COL seeks to address this gap by enforcing logical consistency, which is crucial for applications that necessitate precise information retrieval, such as legal or academic searches. The implications of this development are substantial, as it underscores the importance of logical structure in retrieval systems, alongside semantic content. However, the current model is limited to datasets primarily in English, raising future questions about its responsiveness across diverse languages and varying contexts.

  • 7-4. Debate over Singapore hawker meal affordability

  • A recent statement made by Singaporean Member of Parliament Edward Chia has ignited discussions about the affordability of hawker meals in Singapore compared to Kuala Lumpur. Chia asserted that a typical hawker meal in Singapore costs around SGD5 (approximately RM16.58), which represents a mere 0.1% of the median monthly income of SGD5,197 (about RM17,230) for 2023. In contrast, a street food meal in Kuala Lumpur, estimated at SGD2.90 (roughly RM9.62), accounts for 0.26% of the significantly lower median income of SGD1,901 (around RM6,302.88). The MP used these figures to highlight Singaporeans' relative financial advantages in dealing with rising living costs, commending the high quality and diversity of hawker meals. However, this comparison sparked criticism from various netizens who argued that it oversimplifies the economic landscape by neglecting overarching costs such as housing, education, and other living expenses, which might provide a more nuanced perspective on the affordability discussion.

Conclusion

  • As of May 2025, the interplay of consumer behavior and pricing pressures across major economies highlights a pivotal transition phase. In the US, consumer confidence remains clouded by tariff-related fears, even as inflation rates moderate, underscoring the need for adaptive fiscal policies. In Europe, escalating food prices necessitate focused interventions to support both consumers and retailers; the direction of these policies is crucial for mitigating the economic strain on households that is exacerbated by rising operational costs.

  • Southeast Asia's economic landscape presents a dual narrative, with Malaysia's grocery expenditure challenges juxtaposed against India's impressive economic performance. The strategies being implemented—ranging from regional energy collaborations to technological advancements—illustrate a path toward enhanced resilience and productivity in response to both domestic and global economic pressures. Policymakers must take note of such advancements as they hold the key to fostering sustainable growth through strategic partnerships.

  • Looking forward, a continuous assessment of tariff implications, food-price drivers, and digital innovations will be imperative for maintaining balanced growth and ensuring consumer confidence. Stakeholders in both the public and private sectors will need to remain vigilant in navigating the complexities of these trends, aligning their strategies with the realities of each market condition. Emphasizing responsive policy frameworks and fostering cooperation will facilitate greater economic stability and ultimately support the well-being of consumers across regions.

Glossary

  • Consumer Spending: Consumer spending refers to the total expenditure by households on goods and services. As of May 2025, this spending has slowed in the United States, indicating a cautious approach by consumers due to concerns over tariffs and inflation.
  • Inflation: Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. The report notes a moderation in inflation rates, with the PCE Price Index showing a 12-month inflation rate of 2.1% as of May 2025, down from previous months.
  • Personal Consumption Expenditures (PCE) Price Index: The PCE Price Index measures changes in the price level of consumer goods and services in the U.S. economy. As of April 2025, it recorded a 12-month increase of 2.1%, suggesting a potential easing of inflationary pressures.
  • Tariffs: Tariffs are taxes imposed by a government on imported goods, affecting prices and consumer behavior. In early 2025, anxieties surrounding tariffs contributed to a slowdown in U.S. consumer spending as households anticipated higher prices.
  • Food Inflation: Food inflation refers to the rising prices of food products. The UK has seen a significant increase, with food prices rising annually by 2.8% by May 2025, primarily driven by increased costs in fresh food markets.
  • Consumer Confidence Index: The Consumer Confidence Index, specifically the ANZ-Roy Morgan version, measures how optimistic or pessimistic consumers are about the economy's current and future conditions. In May 2025, it fell to 92.9, indicating a cautious sentiment among U.S. households.
  • Gross Domestic Product (GDP): GDP is the total monetary value of all finished goods and services produced within a country's borders in a specific time period. India achieved a remarkable 7.4% growth in GDP in Q1 2025, driven by strong performance in construction and manufacturing sectors.
  • MoU (Memorandum of Understanding): A MoU is a formal agreement between parties outlining terms and conditions for cooperation. A renewed MoU for agricultural cooperation was announced between Malaysia and Thailand on May 30, 2025, aimed at enhancing food security and sustainable practices.
  • Solar Imports: Solar imports refer to the acquisition of solar energy resources from other countries. Singapore announced plans to import 1 gigawatt (GW) of solar power from Indonesia on May 30, 2025, as part of its energy diversification strategy.
  • AI Research: AI research focuses on the development of artificial intelligence technologies. Recent breakthroughs in AI alignment methods without retraining, developed by Tencent, promise greater adaptability of AI systems to user preferences in May 2025.
  • Retail Costs: Retail costs include all expenses incurred by retailers in providing goods and services, which have risen significantly in the UK due to increases in employer contributions and upcoming legislation as of May 2025.

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