US consumer prices accelerated in May, with CPI up 4.2% YoY in the 12 months to May — the biggest gain since April 2023 — and 0.5% MoM versus 0.6% in April. Higher gasoline and energy prices linked to the Middle East conflict were a key driver. CPI’s third consecutive monthly jump and the second month in which inflation exceeded wage growth add to downside risks for activity and bolster the case for the Fed to keep policy rates on hold into 2027. There are signs consumers are drawing on savings

US consumer prices accelerated in May, with CPI up 4.2% YoY in the 12 months to May — the biggest gain since April 2023 — and 0.5% MoM versus 0.6% in April. Higher gasoline and energy prices linked to the Middle East conflict were a key driver. CPI’s third consecutive monthly jump and the second month in which inflation exceeded wage growth add to downside risks for activity and bolster the case for the Fed to keep policy rates on hold into 2027. There are signs consumers are drawing on savings to cover spending, and the sharp rise in living costs is a political headwind ahead of November’s midterms.