US Inflation Jumps 4.2% In May Pushed By Surging Energy Costs
US consumer prices continued to soar in May, pushed higher by surging energy costs more than three months into a war with Iran, according to government data released Wednesday.
Prices rose 4.2% from May 2025 in the hottest annual reading since April 2023, and 0.5% on a monthly basis, according to the Bureau of Labor Statistics, matching economists’ expectations. The index for energy prices alone accounted for more than 60% of the increase from April, with prices rising 3.9%.Today’s CPI data confirmed our expectation that higher energy costs and their ripple effects on the costs of transportation and food would drive May headline CPI higher,” Moody’s Ratings chief credit officer Atsi Sheth said in a statement. “We expect energy prices to remain a driver of headline inflation until there is greater geopolitical certainty in the Middle East.
May’s CPI report likely reinforces bets that the Federal Reserve will keep interest rates unchanged at its June meeting. Wholesale inflation data out on Thursday will also be important for Federal Reserve policymakers. Last week’s jobs data showed the labor market remains broadly in balance, making inflation the larger concern as it remains well above the Federal Reserve’s 2% long-term target.
