U.S. May CPI Rises to 4.2%, Inflation Peak Linked to War May Have Passed

ME News reports that on June 10 (UTC+8), 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 maintain interest rates unchanged until 2027. Data released on Wednesday showed that the CPI increased 4.2% year-over-year for the 12 months ending in May—the largest gain since April 2023. Prices rose 0.5% month-over-month, following a 0.6% increase in April. The third consecutive month of significant CPI growth highlights mounting pressure on households, as evidence mounts that more consumers are drawing down savings to cover expenses. Moreover, inflation has now exceeded wage growth for a second consecutive month, potentially negatively impacting overall economic growth. At the same time, the sharp rise in the cost of living poses a significant political burden for President Trump and his party, who are striving to retain control of Congress in the November midterm elections. John Briggs, Head of U.S. Interest Rate Strategy at Natixis Corporate & Investment Banking in North America, noted that the monthly core inflation rate was slightly softer than expected, which may help reinforce the argument that the peak in war-related inflation has likely passed and that inflation prospects could improve going forward—provided oil prices remain stable. (Jin10) (Source: ODAILY)