Overview
- The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index rose 0.5% in May and 4.2% year‑over‑year, the highest annual rate since April 2023.
- Energy costs drove the increase with gasoline up about 7% from April and roughly 40.5% over the year, accounting for more than 60% of May’s monthly CPI gain as disruptions around the Strait of Hormuz raised oil prices.
- Core CPI, which excludes food and energy, rose just 0.2% for the month and 2.9% year‑over‑year, suggesting the oil shock has not yet broadly pushed up underlying consumer prices.
- The hotter headline print tightened the case against immediate rate cuts under new Fed Chair Kevin Warsh and pushed market pricing toward a longer period of restrictive policy rather than the cuts traders had expected.
- President Trump’s on‑camera remark that he “loves the inflation” and his claims about secret oil shipments drew rapid political backlash and official pushback, while workers face real‑wage losses because average pay growth of about 3.4% trails the higher inflation rate.