U.S. Inflation Hits 2 Percent in May, Matching Fed Target
Consumer prices rose for a third straight month, led by energy costs, while several non-energy categories posted their first declines in over a year.
marketwatch.comU.S. consumer price inflation reached 2 percent in May from a year earlier, the highest annual rate since April 2023. The figure marked a third consecutive monthly increase and matched economists' expectations.
Rising energy prices drove more than 60 percent of the monthly increase. The May level is the highest since September 2025 and places inflation above 4 percent, more than double the Federal Reserve's target. Several non-energy categories posted price declines in May.
New vehicles, household furniture, and prescription drugs recorded their first drops in 14 months. Three-quarters of Americans said their incomes are not keeping up with inflation, according to a recent CBS News poll. Elizabeth Renter, senior economist at NerdWallet, said consumers are paying more for essentials and can feel powerless to mitigate the pain.
Fuel prices have eased slightly in June, according to the CBS News gas and oil price tracker, though that decline is not captured in the May data. The Federal Reserve's next policy meeting is scheduled for June 17. CME Group's FedWatch tool shows a 96 percent probability that the central bank will hold its benchmark rate steady at that meeting.
Gregory Daco, chief economist at EY-Parthenon, noted the gap between wage growth and price increases reported in the CBS poll.
