U.S. CPI rises to 4.2% in May as energy prices surge
The Bureau of Labor Statistics reported that the consumer price index increased 0.5% in May, bringing the annual inflation rate to 4.2%, while core CPI grew 0.2% month-over-month.
The U.S. consumer price index (CPI) rose 0.5% in May on a seasonally adjusted basis, pushing the year-over-year inflation rate to 4.2%, according to the Bureau of Labor Statistics. Both figures matched the Dow Jones consensus estimates. The increase marks the first time inflation has topped 4% in three years and is the highest level since April 2023, up from 3.8% in the prior month.
Core CPI, which excludes food and energy, climbed 0.2% in May and is up 2.9% from a year earlier. While the annual core rate met forecasts, the monthly gain fell short of the 0.3% estimate and was lower than April’s 0.4% rise.
Energy prices drove much of the overall increase, jumping 3.9% and contributing to a 23.5% rise over the past 12 months. Food prices rose 0.2% and shelter costs, a key metric for monetary policy, advanced 0.3%, half the pace recorded in April. Transportation services fell 0.6%, new vehicle prices declined 0.3%, and used-car prices edged up 0.1%.
The data arrive as Federal Reserve officials weigh future interest-rate decisions, with markets expecting the Federal Open Market Committee to hold rates steady at its June 17 meeting. Investors will be watching for any signals of heightened concern among policymakers about the inflation surge.
"Iran will 'pay the price' for not taking a peace deal," President Donald Trump said, adding geopolitical tension to the economic backdrop.
Following the CPI release, stock-market futures remained in negative territory but recovered slightly from earlier lows, while Treasury yields were largely unchanged.
