U.S. May CPI Seen Climbing to 4.2% as Inflation Fears Intensify

Odaily Planet Daily reports that markets are pricing in a sharp pickup in U.S. inflation. May headline CPI is expected to rise to 4.2% year over year (previous: 2.4%), while the month-over-month pace is forecast to cool to 0.5%. If confirmed, the print would push CPI above 4% for the first time since May 2023 and mark the highest level since April 2023. The rebound in overall inflation is largely being pinned on higher energy prices linked to the war in Iran. Core CPI, which excludes food and energy, is also expected to firm, with the annual rate seen at 2.9% and the monthly rate easing to 0.3%. Investors are increasingly concerned that inflation pressures are broadening beyond energy. Rising crude prices are feeding through to the wider economy, raising the risk that inflation will not fade quickly. Charles Schwab Chief Strategy Officer Sanders said inflation is "not just an oil issue", citing money supply dynamics and an expanding connection to AI. She added that the inflation challenge is broader than energy, suggesting price pressures may remain sticky. Sanders noted that investor unease is largely inflation-driven, and a worse-than-expected reading would likely weigh on equities. The Trump administration expects inflation to ease once the Middle East conflict cools. Sanders countered that supply chains have been heavily disrupted, arguing that even if the war ends quickly, oil prices are unlikely to return to prior lows because it is "not a simple onoff switch." (Jin10)