U.S. May inflation reaches 4.2%, the fastest pace in three years

U.S. consumer prices rose at the fastest pace in three years, 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 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 CPI posted its third consecutive significant monthly rise, highlighting growing pressure on households as evidence mounts that more consumers are drawing down savings to cover expenses. Additionally, inflation has now exceeded wage growth for a second consecutive month, potentially adversely affecting 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 retain control of Congress in the November midterm elections. (Jin10)