The CPI rose 0.5% in May from the prior month, putting both headline inflation and the monthly increase in line with economists\u2019 estimates.<\/p>\n
Core CPI, which strips out more volatile food and energy prices<\/a>, rose 0.2% from the prior month and 2.9% year over year. The monthly increase came in 0.1% below economists\u2019 estimates.<\/p>\n Official White House Photo by Daniel Torok.<\/p>\n Digging into the numbers <\/p>\n The bulk of what\u2019s driving the large increase is energy prices, which have been much higher since the start of the Iran war and the closure of the Strait of Hormuz, a critical waterway for global oil supply.<\/p>\n In May, energy prices rose another 3.9% from the prior month, following monthly increases of 10.9% and 3.8% in March and April, respectively.<\/p>\n But if you look at some of the other categories, price growth slowed in May from April:<\/p>\n CPI Category<\/p>\n Growth in April<\/p>\n Growth in May<\/p>\n Food<\/p>\n 0.6%<\/p>\n 0.5%<\/p>\n New Vehicles<\/p>\n -0.2%<\/p>\n -0.3%<\/p>\n Apparel<\/p>\n 0.6%<\/p>\n 0.3%<\/p>\n Medical Care Commodities<\/p>\n -0.4%<\/p>\n -0.7%<\/p>\n Shelter<\/p>\n 0.6%<\/p>\n 0.3%<\/p>\n Transportation Services<\/p>\n 0.3%<\/p>\n -0.6%<\/p>\n Now, investors should remember that the prices of some of the above items have continued to rise, meaning prices are still increasing on top of what have already been some pretty steep increases this year, so consumers are still grappling with affordability issues.<\/p>\n And this doesn\u2019t mean Americans are out of the woods yet either.<\/p>\n \u201cAmericans are getting squeezed financially by inflation that\u2019s back at a 3-year high,\u201d said Heather Long, chief economist at Navy Federal Credit Union, according to CNBC. \u201cThe frustration for many Americans is that so many of the basics are up in price right now — gas, food, electricity, and medical care are all clear pain points that are above 3% inflation. Ending the war in Iran will help to moderate inflation<\/a>, but the worst is likely still to come for rising food prices.\u201d<\/p>\n Why Warsh will likely view the report as positive <\/p>\n Following the May CPI report, traders betting on changes to the Fed\u2019s overnight benchmark lending rate, the federal funds rate, through 30-day fed funds futures, slightly decreased the likelihood of a rate hike at the Fed\u2019s December meeting.<\/p>\n That\u2019s the first meeting the market expects the Fed to hike at, but the likelihood of such an event decreased from 43.3% to 42.7%, as of this writing. Keep in mind that these probabilities change frequently.<\/p>\n Warsh has said on numerous occasions now that he wants to change the lens through which the Fed views inflation.<\/p>\n \u201cThe measures I prefer are looking at things that are called trimmed averages, where we take out all of the tail risks, all of the one-off items, and we ask ourselves whether the generalized change in prices is having second-order effects on the economy,\u201d Warsh said during Congressional testimony in April. \u201cAgain, they’re not where they should be, but I think that the trend is quite favorable.\u201d<\/p>\n I think the May CPI shows that, while inflation is high, it\u2019s largely driven by energy, which is more of a one-off item with some tail risk if the Iran war is prolonged.<\/p>\n Earlier this month, there was also a strong jobs report, which is what you want to see if you\u2019re the Fed: the labor market improving and core inflation coming down.<\/p>\n So I think Warsh is likely to find a lot to like in this report. It doesn\u2019t necessarily give him enough to cut interest rates, but it\u2019s likely enough to keep taking a wait-and-see approach and hope the Iran war ends soon, so the global oil supply chain can normalize.<\/p>\n Missed Nvidia in 2009? This Rare Signal Is Flashing Again <\/p>\n In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. If you\u2019d invested $5,000 then,\u00a0you\u2019d be sitting on\u00a0$2,703,231\u00a0today.*<\/p>\n Now, for the first time in years, that same\u00a0“Total Conviction” signal<\/a>\u00a0is flashing for a company 1\/100th the size of Nvidia. It\u2019s a key player in the $1.8 trillion space race, and with the stock recently sitting 20% off its highs, the window to get in early is closing fast.<\/p>\n Continue \u00bb<\/a><\/p>\n *Stock Advisor returns as of June 9, 2026<\/p>\n The Motley Fool has a disclosure policy<\/a>.<\/p>\n![\"Kevin](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/06\/b0f5b81144a3b9b70b20857051a3bbf3.jpeg\")
Kevin Warsh. <\/p>\n