Consumer prices up 4.2% over the past year

Inflation picked up in May, with the Consumer Price Index (CPI) rising 4.2% over the past 12 months, according to new data released by the U.S. Bureau of Labor Statistics. That’s an increase from the 3.8% annual inflation rate reported in April.

Key takeaways:

• Overall inflation: Consumer prices increased 4.2% year-over-year through May.
• Monthly increase: Prices rose 0.5% in May, following a 0.6% increase in April.
• Energy costs: Energy prices jumped 23.5% over the past year and rose 3.9% in May alone.
• Housing costs continued to rise: Shelter prices increased 0.3% in May, remaining a significant contributor to inflation.
• Food prices climbed: Food costs were up 3.1% over the past year, including a 0.2% increase in May.
• Core inflation remained moderate: Excluding food and energy, prices rose 2.9% over the past year.
• Higher prices: Communication services, airline fares, medical care, personal care, and recreation all saw increases in May.
• Lower prices: Motor vehicle insurance, household furnishings and operations, and new vehicle prices declined during the month.

Why it matters

The rise in energy costs was the primary driver of inflation in May, accounting for more than 60% of the month’s overall increase in consumer prices. While core inflation remained below 3%, rising fuel, housing, and food costs continue to put pressure on household budgets and business operating expenses.

For businesses, the report suggests inflationary pressures remain present despite recent hopes that price growth was moderating. For consumers, essentials such as energy, housing, and food continue to become more expensive than they were a year ago.