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

Economists expect Wednesday's US May CPI to show consumer prices rising at their fastest pace in more than three years. Moody's Analytics chief economist Mark Zandi said, unlike pandemic-era inflation driven by supply disruptions, the recent surge is largely linked to government policy including the Iran war and is eroding consumer confidence. A CBS poll found 75% of Americans say their incomes are not keeping up with inflation. Economists say energy price gains are the main contributor to persistent inflation and will watch goods and services components to assess pass-through; higher diesel is lifting trucking costs and prices for transported goods from groceries to e‑commerce parcels, and higher jet fuel has been passed through into airfares.

Reuters survey: 94% of economists expect the Bank of Japan to raise its key rate to 1.00% in June (May survey: 65%).