U.S. consumer prices rose 4.2% in May from a year earlier, the highest inflation reading since April 2023, as energy costs pushed the headline CPI higher and core inflation held at 2.9%.
U.S. inflation moved back above 4% in May 2026, with the Consumer Price Index rising 4.2% from a year earlier, according to the Labor Department release that was quickly confirmed by major news outlets.
The reading was the highest year-over-year inflation rate since April 2023 and marked an acceleration from April’s 3.8% pace. On a monthly basis, headline CPI increased 0.5% in May.
Core CPI, which strips out food and energy, rose 2.9% from a year earlier and 0.2% from the previous month. Early coverage said higher energy prices were the main driver of the pickup in headline inflation.
The report matters for financial markets because it may keep the Federal Reserve cautious about cutting interest rates too quickly. A hotter-than-expected inflation trend can complicate the case for easier policy, especially if price pressures continue to spread beyond energy.
Investors will now watch for the market reaction and for comments from Fed officials in the days ahead, as the central bank weighs whether inflation is easing enough to support rate cuts later this year.
Revision note
Initial automated publication.