June 10, 2026
US consumer inflation likely increased at its fastest pace in three years in May as the Middle East conflict raised prices of energy products, which would provide more ammunition for the Federal Reserve to keep interest rates unchanged this year.
The anticipated third straight month of strong year-on-year Consumer Price Index readings from the Labor Department on Wednesday is expected to highlight mounting pressure on households as evidence suggests more consumers are dipping into savings to finance their spending. Inflation is likely to outpace wage growth in May for a second straight month, a development that could weigh on overall economic growth.
The soaring cost of living is a political liability for President Donald Trump and his Republican Party, seeking to retain control of Congress in the midterm elections in November. Trump won the 2024 presidential election in large part because of his promise to lower inflation, but has seen his approval rating tumble as frustration mounts over his handling of the economy.
"The top-line increase in inflation will outpace wage growth for the second consecutive month," said Joseph Brusuelas, chief economist at RSM. "What that means is Americans are seeing their paycheck decline in real terms, which, if it were sustained, would tend to suggest we're going to have a challenge around household consumption in the second half of the year."
