Inflation climbs in May as energy costs keep pressure on consumers

A Morning with Maria panel examined market movements, the repercussions of the Iran conflict, and investment opportunities tied to government‑backed firms.

This story about the May 2026 CPI inflation report is developing and will be updated with more details.

Inflation edged higher in May as American consumers continued to confront elevated fuel prices amid the Iran war’s impact on the energy market and the broader economy.

The Bureau of Labor Statistics (BLS) reported on Wednesday that the consumer price index (CPI) – a comprehensive gauge of prices for everyday items such as gasoline, groceries, and rent – increased 0.5% month‑over‑month and is 4.2% higher than a year earlier. The annual rate is the highest since April 2023.

Expectations versus reality

Both the 0.5% monthly rise and the 4.2% annual increase matched the forecasts of economists surveyed by LSEG.

Core prices, which strip out volatile measures of gasoline and food to reveal underlying price trends, rose 0.2% on a monthly basis and 2.9% from a year ago. The monthly core gain was slightly below the expected 0.3% increase, while the annual core figure aligned with economists’ projections.

Inflation is squeezing American consumers, and the latest report indicates the pressure is intensifying

The cost‑of‑living breakdown

Persistently high inflation has imposed severe financial strain on most U.S. households, forcing them to pay more for essential goods and services such as food and rent. Price increases weigh especially heavily on lower‑income Americans, who allocate a larger share of their already‑tight budgets to necessities and have limited capacity to absorb shocks.

Energy prices jumped 3.9% in May amid the Iran war’s disruption of Middle Eastern oil supplies, marking a 23.5% increase over the past year. The BLS noted that the energy index accounted for more than 60% of the overall CPI rise in May.

Gasoline prices climbed 7% month‑over‑month in May and are 40.5% higher than a year ago. Electricity prices rose 0.6% last month and are up 5.9% year‑over‑year. Utility gas service prices fell 0.5% in May but remain 3% above their year‑ago level.

Gas prices are up a little more than 40% from a year ago in May, the BLS report noted. (Ariana Drehsler/Bloomberg via Getty Images)

Food prices increased 0.2% in May and are 3.1% higher than a year ago. The food at home index rose 0.1% for the month and 2.7% compared with last year. The food away from home index grew 0.3% month‑over‑month and 3.5% year‑over‑year.

Meats, poultry and fish prices fell 0.4% in May but are up 6.2% from last year. Beef and veal prices dropped 1.6% for the month but remain 12.9% above their year‑ago level. Egg prices rose 4% in May but are down 35.2% year‑over‑year as supply normalized following an avian flu outbreak. Fruit and vegetable prices increased 0.2% month‑over‑month and are up 6.1% from a year ago.

What experts are saying

What does it mean for markets

Futures for the benchmark S&P 500 index slipped about 0.5% following the release of the inflation report ahead of the market open.

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