TLDR
- U.S. CPI rose 4.2% year-over-year in May, the highest reading since April 2023
- Energy prices drove over 60% of the monthly increase, rising 3.9% from April
- Core inflation came in at 2.9% year-over-year, with a softer-than-expected 0.2% monthly gain
- Grocery prices cooled, rising just 0.1% month-over-month, while dining out stayed sticky at +0.3%
- Real average hourly earnings fell 0.1%, meaning workers’ wages lost ground to inflation
U.S. inflation accelerated in May, with the consumer price index climbing 4.2% from a year ago — the hottest reading since April 2023.
BREAKING: May CPI inflation rises to 4.2%, the highest level since April 2023.
Core CPI inflation also rises to 2.9%, the highest since September 2025.
Inflation in the US is officially back above 4% and more than double the Fed's target.
Odds of Fed rate hikes are rising.
— The Kobeissi Letter (@KobeissiLetter) June 10, 2026
The Bureau of Labor Statistics released the data Wednesday at 8:30 a.m. Eastern. On a monthly basis, prices rose 0.5%, down slightly from April’s 0.6% gain, and in line with economist forecasts.
Energy was the main culprit. The energy index jumped 3.9% from April and accounted for more than 60% of the overall monthly increase. The U.S. has been dealing with elevated energy costs for more than three months, tied to the ongoing conflict with Iran.
Food prices rose 0.2% month-over-month, a pullback from April’s 0.5% pace. Over the past 12 months, food costs are up 3.1%.
Grocery Bills Get a Breather
The grocery component was the bright spot. The food-at-home index rose just 0.1% in May, a sharp slowdown from April’s 0.7% monthly gain. Year-over-year, grocery prices are up 2.7%.
Dining out remained stickier. The food-away-from-home index rose 0.3% month-over-month and is up 3.5% over the past year.
Elsewhere, auto insurance prices fell 1.7% from April, offering some relief. Hospital services costs rose 0.7%.
Coffee prices continued to climb, while cheese prices fell. The report didn’t break out specific figures for those categories.
Core Inflation Softer Than Expected
Core CPI, which strips out food and energy, rose 2.9% year-over-year, matching forecasts. But the monthly core reading came in at 0.2%, below the 0.3% economists had expected. That softer core print eased some concerns about rapid further rate hikes.
For workers, the numbers weren’t good. Real average hourly earnings dropped 0.1%, meaning wages didn’t keep up with price increases in May.
The Fed has been watching inflation closely. The combination of a hotter headline number and a cooler core print gives policymakers a mixed picture heading into their next meeting.
Annual CPI is now running at its highest level in three years. The April 2023 reading was the last time the number was this elevated.
The monthly pace of inflation has been slowing — May’s 0.5% gain follows April’s 0.6% — but the year-over-year figure is still moving in the wrong direction.
The next CPI report will cover June data and is expected to release in mid-July.
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