FX.co ★ US Inflation Rate Accelerates to Fresh 2023-Highs

The annual inflation rate in the US rose to 4.2% in May 2026, its highest level since April 2023, up from 3.8% in April and in line with market expectations. This was the third consecutive monthly acceleration in headline inflation, driven largely by a sharp rise in energy costs, which surged 23.5% (compared with 17.9% in April) following the energy shock associated with the conflict with Iran.

Gasoline prices jumped 40.5%, after a 28.4% increase in the previous month, while fuel oil climbed 58.9% (up from 54.3% in April). Inflation also quickened for shelter, at 3.4% versus 3.3% in April, and for food, at 3.1% versus 2.3%.

On a monthly basis, the Consumer Price Index (CPI) rose 0.5% in May, slightly below April’s 0.6% increase but in line with forecasts. Energy prices were up 3.9% and accounted for more than 60% of the monthly gain.

The annual core inflation rate, which excludes food and energy, edged up to 2.9% in May, its highest reading since September 2025, compared with 2.8% in April and matching expectations. However, on a month‑over‑month basis, core CPI increased just 0.2%, down from 0.4% in April and below the 0.3% forecast.