June 16, 2026
US consumer inflation increased at its fastest pace in three years in May, boosted by surging prices for energy products amid the West Asia conflict, and giving more ammunition for the Federal Reserve to keep interest rates unchanged into 2027.
The third straight month of strong increases in the Consumer Price Index reported by the Labour Department on Wednesday underscored the mounting pressure on households, who are increasingly tapping their savings to fund spending.
Inflation outpaced wage growth for a second consecutive month, which 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.
"Americans are getting squeezed financially by inflation," said Heather Long, chief economist at Navy Federal Credit Union. "It's not just bad vibes about the economy now; there are real financial pressures, especially on middle-class and lower-income households."
