The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 4.2% year-over-year in May 2026, matching consensus estimates and reaching its highest level since April 2023. On a monthly basis, headline inflation increased 0.5%, driven largely by a 3.9% spike in energy costs amid global supply shocks. Core CPI, which excludes food and energy, rose a softer-than-expected 0.2% for the month, though the annual core rate remained elevated at 2.9%.
Persistent price pressures continued to erode purchasing power, with real average hourly earnings falling 0.3% year-over-year. Market reaction saw Treasury yields remain near multi-year highs, with the 30-year yield holding above 5.0%, as investors assessed the likelihood of the Federal Reserve maintaining a restrictive policy stance at next week's FOMC meeting.