WASHINGTON, June 10 U.S. consumer inflation increased at its fastest pace in three years in May as the Middle East conflict raised the price of gasoline and other energy products, giving more ammunition for the Federal Reserve to keep interest rates unchanged into 2027.
The Consumer Price Index increased 4.2% in the 12 months through May, the largest gain since April 2023, the Labor Department’s Bureau of Labor Statistics said on Wednesday
The CPI advanced 3.8% year-on-year in April. Prices increased 0.5% on a monthly basis after climbing 0.6% in April. Economists polled by Reuters had forecast the CPI increasing 4.2% year-on-year and gaining 0.5% on a monthly basis.
The third straight month of strong increases in the CPI highlighted mounting pressure on households as evidence suggests more consumers are dipping into savings to finance their spending. Inflation outpaced wage growth for a second consecutive month, which could weigh on overall economic growth. The soaring cost of living is a political liability for President Donald Trump and his Republican Party, seeking to retain control of Congress in the midterm elections in November.