May CPI Set to Top 4% as Core Prices Also Climb
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- May CPI is expected at a 4.2% annual rate off a 0.5% monthly gain per Wall Street consensus, marking the first time the index tops 4% since May 2023 and the highest reading since April 2023
- Much of the headline acceleration is attributed to surging energy costs linked to the Iran war, with annual headline inflation at just 2.4% a year ago
- Core CPI (excluding food and energy) is projected at 2.9% annual after a 0.3% monthly rise per Dow Jones, signaling inflation is broadening beyond energy
- Liz Ann Sonders, chief investment strategist at Charles Schwab, called it a "broader inflation problem than just energy," citing oil, money supply, and AI as drivers of sticky inflation
- Sonders warned that a worse-than-expected print "doesn't sit well with the equity market," reflecting investor anxiety already building
- Trump administration officials argue inflation will come down quickly once Middle East fighting settles, but Sonders countered that production disruptions mean oil won't snap back to prior lows even with a quick resolution
- April's reading was 3.8% headline and 2.8% core; the Bureau of Labor Statistics releases May data Wednesday at 8:30 a.m. ET
Why it matters: A 4.2% headline print would confirm inflation is re-accelerating, but the more telling number is core at 2.9% — up from 2.8% in April — which strips out the Iran-energy shock and shows underlying prices are still climbing. Sonders's warning that equities won't tolerate a hotter-than-expected reading makes the 8:30 a.m. release a binary event for positioning, and her dismissal of the administration's quick-recovery thesis raises the stakes for any Fed pivot timeline.
