Odaily Planet Daily report: U.S. consumer prices rose at the fastest pace in three years in May, as Middle East conflicts pushed up gasoline and other energy prices, providing further justification for the Federal Reserve to keep interest rates unchanged until 2027.
Data released on Wednesday showed that the CPI rose 4.2% year-over-year for the 12 months ending in May, the largest increase since April 2023. Prices increased 0.5% month-over-month, following a 0.6% rise in April. The third consecutive month of significant CPI growth highlights growing pressure on households, as evidence mounts that more consumers are drawing down savings to cover expenses.
In addition, the inflation rate has exceeded wage growth for the second consecutive month, which could negatively impact overall economic growth. Meanwhile, the sharp rise in the cost of living poses a significant political burden for President Trump and his party, who are striving to maintain control of Congress in the November midterm elections.
John Briggs, Head of U.S. Interest Rate Strategy at Natixis North America, said that the monthly core inflation rate coming in slightly softer than expected may help reinforce the argument that the peak in war-related inflation has likely passed, suggesting a potential improvement in inflation prospects going forward—provided oil prices remain stable. (GoldSilver)