CPI Report: Annual Inflation Rate Comes In At 4.2% In May, Highest Since April 2023

• Core CPI, which excludes food and energy, showed a 0.2% increase in May.
• Soaring energy costs drove the rise in headline price increase, with the index for energy rising 3.9% in May.
• For the 12 months ending May, the gasoline index surged 40.5%, the BLS report stated.

U.S. consumer prices rose in line with expectations in May, according to the Consumer Price Index (CPI) report released on Wednesday.

According to data from the Bureau of Labor Statistics (BLS), on a seasonally adjusted basis, CPI rose 0.5% in May, after rising 0.6% in April.

This pushed the annual inflation rate to 4.2% before seasonal adjustment, driven by higher energy prices and marking the highest level since April 2023.

Core CPI, which excludes food and energy, showed a 0.2% increase in May, lower than a Dow Jones estimate of 0.3%, according to MarketWatch data.

On an annual basis, core CPI stood at 2.9%, higher than Wall Street expectations. The headline and core inflation are still above the Federal Reserve's long-term target of 2%.

Source: Bureau of Labor Statistics, U.S. Department of Labor

Energy Costs Soar

Soaring energy costs drove the rise in the headline price index, with the energy index rising 3.9% in May and accounting for over 60% of the total increase in consumer inflation during the month.

For the 12 months ending May, the gasoline index surged 40.5%, the BLS report stated.

According to AAA data, gasoline prices have soared by nearly 32% since the war in Iran began in February this year.

Food Costs Inch Up, Airline Fares Rise

The BLS report also stated that food costs inched up by 0.2% during May, while the shelter index rose 0.3%.

Communication services, airline fares, medical care, personal care, and recreation increased in May. However, new vehicles, household furnishings and operations, and motor vehicle insurance prices declined during the month, the report stated.

Meanwhile, U.S. equities declined in Wednesday's pre-market trade. At the time of writing, the SPDR S & P 500 ETF (SPY), which tracks the S & P 500 index, was down 0.36%; the Invesco QQQ Trust ETF (QQQ) fell 0.57%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) inched up by 0.39%. Retail sentiment on Stocktwits regarding the S & P 500 ETF was in the 'bullish' territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.05% at the time of writing.

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