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<\/p>\nSummary<\/p>\n
Inflation is expected to exceed 4% for the first time in three years driven by rising gas prices from the Iran war.
\n Real wages are declining as price increases outpace paychecks, with Americans facing growing affordability pressures.
\n Food prices are rising, with fruits and vegetables seeing their highest monthly increase since 2010.<\/p>\n
\n AI-generated summary was reviewed by a CNN editor.<\/p>\n
\n Inflation, as measured by the Consumer Price Index, is expected to run above 4% for the first time in three years because of the Iran war\u2019s oil price shock.\n <\/p>\n
\n Fast-rising gas prices are expected in May to once again have an outsized effect on overall inflation, pushing up prices at a similar pace as that seen in 2021 and 2022, when inflation was headed for a four-decade high of 9.1%.\n <\/p>\n
\n Economists expect that inflation rose 0.5% in May and 4.2% from a year ago, according to FactSet estimates. That would put the three-month average at just under 0.7%, the fastest since the April to June 2022 period (when it was 0.8%).\n <\/p>\n
\n That\u2019s an unsettling throwback; however, economists say that this bout of inflation isn\u2019t expected to be as bad as the last one \u2013 current projections have CPI topping out in the range of 4.5% to 5% this year.\n <\/p>\n
\n However, price levels are another matter. The latest inflation shock is adding another layer of fast-rising prices: Common goods and services are significantly more expensive than they were before the pandemic.\n <\/p>\n
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\n Affordability pressures are building, and Americans are having a harder time keeping up.\n <\/p>\n
\n Fast-rising prices are already outstripping Americans\u2019 paychecks, and that gap is widening. If CPI rises 4.2% in May, it will mean that real (inflation-adjusted) wages are declining at an annual rate of 0.8%.\n <\/p>\n
\n The ripple effects from the war-driven energy price shock could become even more evident in May\u2019s data, although it\u2019s expected to be a slow boil: Categories such as airfares, transportation, food and apparel could see further increases.\n <\/p>\n