U.S. Consumer Prices Rose 4.2% Year-Over-Year in May

Consumer prices increased 4.2% from May 2025 and 0.5% from April to May, the Bureau of Labor Statistics reported Wednesday. The annual rate crossed 4% for the first time since May 2023. The energy index rose 3.9% in May and accounted for more than 60% of all price increases. Gasoline prices jumped 7% month-to-month and nearly 59% year-over-year.

Core CPI, which excludes food and energy, rose 2.9% annually and 0.2% monthly. The monthly gain fell below economist estimates of 0.3%. Employment data released earlier showed the U.S. added 172,000 nonfarm jobs in May, exceeding forecasts of 105,000.

The Federal Reserve's policymaking panel meets next week for its first interest-rate vote under new chair Kevin Warsh. Minutes from the April meeting showed officials saw an increased risk that inflation would take longer to return below the 2% target. Markets now price a 66.1% chance of a rate hike by the December meeting, according to CME Group's FedWatch tool.