Inflation topped 4% in May as CPI surged to highest level in 3 years

Inflation across the U.S. accelerated in May as the shock to global energy supplies from the Iran war continued to push prices higher.

The Consumer Price Index rose at an annual rate of 4.2%, up from 3.8% in the prior month and marking the highest level since April 2023.

By the numbers

Economists polled by financial data firm FactSet predicted inflation in May would rise at an annual rate of 4.2%. 

The CPI, a basket of goods and services typically bought by consumers, tracks changes in prices over time.

Inflation has accelerated from an annual rate of 2.4% in January to a three-year high, driven largely by the energy shock stemming from the Iran war. The closure of the Strait of Hormuz has disrupted global supply chains, driving up prices on everything from gasoline to airfares.

In its May report, the Labor Department said energy prices accounted for more than 60% of the monthly CPI increase. Gasoline prices jumped 40.5% from a year earlier.

To be sure, fuel prices have eased slightly in June, as the CBS News gas and oil price tracker shows. However, that decline is not captured in the May data.

Core inflation, which excludes the more volatile food and energy categories, rose at an annual rate of 2.9%, up slightly from 2.8% in April.