Consumer Price Index CPI Highest In Over Three Years, Another Disaster

Month-Over-Month CPI

The BLS reports the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April.

Over the last 12 months, the all items index increased 4.2 percent before seasonal adjustment.

The BLS rounds to 1 decimal point. I show 2 decimal places

CPI Month-Over-Month

• All Items: 0.47 percent

• All Items Excluding Food and Energy: 0.21 percent

• Food and Beverage: 0.15 percent

• Shelter: 0.32 percent

• Owners’ Equivalent Rent: 0.30

• Rent of Primary Residence: 0.36

• Medical Care Services: 0.53 percent

• Medical Care Commodities: -0.71 percent

• Energy: 3.88 percent

• Gasoline: 7.04 percent

• Food at Home: 0.06 percent

• Food Away from Home: 0.30

This is structurally broad based. Medical care services has more weight in the upcoming PCE report, the Fed’s preferred measure of inflation.

CPI Month-Over-Month Energy, Gasoline, Utilities

Month-Over-Month CPI: Energy, Gasoline, Utilities

Energy, Gasoline, Utilities and Fuel Month-Over-Month

• Energy: 3.88 percent

• Gasoline: 7.04 percent

• Utilities and Fuel: 0.63

These increases are on top of last month’s huge leaps.

The bright spot, looking ahead, is gasoline prices will take a big dive. But that will not help core inflation.

Five Measures of Inflation

CPI and PCE Year-Over-Year Percent Change

Five Measures of Inflation Year-Over-Year

• CPI : 4.25 percent – Bottom April 2025 at 2.31 percent

• Core CPI: 2.85 percent – Bottom February 2026 at 2.46 percent

• CPI Rent: 2.92 percent – Bottom March 2026 at 2.56 percent

• PCE: 3.77 percent – Bottom September 2024 at 2.26 percent

• Core PCE: 3.29 percent – Bottom April 2025 at 2.61 percent

PCE numbers are as of April 2026, CPI as of May 2026. The May PCE numbers are due June 25.

CPI and PCE Year-Over-Year Percent Change

CPI and Core CPI Year-Over-Year

3.8 percent is the highest year-over-year inflation since 4.9 percent in April of 2023.

CPI Year-Over-Year Percent Change Major Categories

CPI Year-Over-Year Major Categories

Small Price to Pay

This is a small price to pay if you focus on the mission.

Q: What’s the mission?
A: Our mission is to return the strait to where it was before we started this war.

The mission is going spectacularly because Iran has no cards.

Truth Social: The Iranians don’t seem to realize they have no cards, other than a short term extortion of the World by using International Waterways. The only reason they are alive today is to negotiate! President DONALD J. TRUMP

I’m sure glad for that. Imagine if Iran had cards.

Baptism of Fire Coming Up

This CPI report was just in time for Kevin Warsh’s first FOMC meeting as Fed Chair on June 17.

Trump expects Warsh to deliver a rate cut. I believe the Fed bias will be shift to tighten from neutral.

Warsh’s first press conference rates to be a real hoot.

Related Posts

May 13, 2026: Producer Price Index PPI Surges 1.4 Percent in April, Fed Behind the Curve?

The PPI numbers exceeded the highest estimate of every economist surveyed.

June 9, 2026: Small Business Hiring Plans Are the Lowest in Six Years

The NFIB Small Business Optimism Index declines again.

Key Findings

• The Employment Index remained essentially flat in May, registering 100.3 in May after measuring 100.4 in April. This is the third consecutive month in which the Index has declined. The current reading is below the 2025 average of 101.2 but slightly above the historical average of 100.0.

• In May, job openings and hiring plans fell notably to the lowest levels in six years. Twenty-nine percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down 5 points from April and marking the lowest level since May 2020.

• A seasonally adjusted net 9% of owners plan to create new jobs in the next three months, down 4 points from April, also marking the lowest level since May 2020.

• In May, reports of both actual and planned price increases rose significantly. The net percent of owners raising average selling prices rose 6 points from April to a net 36% (seasonally adjusted), marking the highest reading since March 2023. A net 34% (seasonally adjusted) plan to increase prices, up 7 points from April and marking the highest reading since July 2022.

• Eighteen percent of business owners cited inflation as their single most important business problem,up 2 points from April and marking the highest reading since December 2024. Inflation ranks as the second top problem.