Consumers are paying significantly more for goods and services, as new government data shows prices climbed 4.2% in the 12 months ending in May. The price of goods and services within the month of May jumped 0.5%.
According to the Bureau of Labor Statistics, inflation rose at its fastest annual pace since April 2023, driven largely by oil and energy prices, which surged after the United States launched an attack on Iran.
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The consumer price index has spiked notably in recent months. In February, annual inflation stood at 2.4%, closer to the Federal Reserve’s target of 2%. The Fed had projected a quarter-point rate cut this year, but it typically raises rates during periods of high inflation.
With inflation more than double the Fed’s target and job growth remaining strong, hopes for interest rate cuts have faded. The central bank could opt to raise rates at its meeting next week.
The consumer price index weighs the cost of goods and services based on their importance, with food, shelter and energy carrying more weight.
Since February, prices have risen more than 2%, fueled by a nearly 20% jump in energy costs. Those increases have started to show up in the price of food, airfares and motor vehicle maintenance.
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