May’s Consumer Price Index rose 4.2% from a year earlier, marking the fastest annual increase since April 2023. The result matched economists’ forecasts but rose from the 3.8% annual rate recorded in April.
Consumer prices increased 0.5% from the previous month. Energy costs accounted for about 60% of the monthly rise as higher oil and gasoline prices reached consumers. Food prices increased 0.2%, while grocery prices rose 0.1%.
Core inflation, which excludes food and energy, provided some relief. Core CPI increased 0.2% in May, below the 0.3% estimate. The annual core rate stood at 2.9%, matching forecasts but staying above the Federal Reserve’s 2% target.
Art Hogan, chief market strategist at B. Riley Wealth, said the data was ‘very much in line with expectations,’ but added that inflation was ‘still moving in the wrong direction.’ Investors widely expect the to keep interest rates unchanged at its June meeting. Markets are also pricing in at least one quarter-point increase before the end of 2026.