U.S. inflation accelerated to 4.2% year-over-year in May, the highest level since April 2023, as energy prices continued to rise amid disruptions linked to the Iran conflict. The Labor Department reported that the Consumer Price Index increased 0.5% during the month, while core inflation, which excludes food and energy, rose 2.9% annually. Markets increased expectations for a potential Federal Reserve rate hike later this year following the report.
- Headline CPI rose 4.2% year-over-year in May, up from 3.8% in April and matching economist forecasts.
- Monthly CPI increased 0.5%, slowing slightly from April’s 0.6% gain.
- Energy prices rose 3.9% in May and accounted for more than 60% of the monthly CPI increase.
- Gasoline prices jumped 7.0% during the month and were up 40.5% from a year earlier.
- Core CPI increased 0.2% month-over-month and 2.9% annually.
- Airline fares rose 2.7%, while motor vehicle insurance fell 1.7% and prescription drug prices declined 0.9%.
- Real average hourly earnings declined 0.7% year-over-year as inflation outpaced wage growth for a second consecutive month.
- The next CPI report is scheduled for July 14, 2026.
Relevant Companies
- Exxon Mobil ($XOM) - Higher energy prices and sustained oil market disruptions may affect revenue and earnings.
- Chevron ($CVX) - Elevated crude oil and fuel prices could impact upstream and refining operations.
- JPMorgan Chase ($JPM) - Shifting Federal Reserve rate expectations may affect lending margins, funding costs, and capital markets activity.
Editor’s Note: This is a developing story. This article may be updated as more details become available.
