U.S. May CPI could reach the highest level in more than three years, and there are still no signs that inflation is warming back up.

U.S. Consumer Price Index (CPI) forecast for May is expected to record the largest monthly increase since 2023, primarily driven by soaring energy prices. Moody's analysis warns that inflation may have begun to erode Americans' psychological expectations.
(Background: Bitcoin retraced to $62,000! $426 million liquidation in 24 hours, CPI tonight will set the direction)
(Additional context: Trump: hopes to cut interest rates but "left to Powell to decide"! Inflation at 3.8%, non-farm doubled, 96% betting on rate hikes by year's end)

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• Energy costs lead the way: it’s not just gasoline getting expensive
• CBS poll: three-quarters of Americans feel their income is falling behind
• Differences from pandemic inflation: policy vs. supply chain
• Impact on Taiwan market

The U.S. Consumer Price Index (CPI) for May will be announced this Wednesday, with several economists predicting the data will show the largest single-month increase since 2023. Moody’s chief economist Mark Zandi pointed out that the driving logic behind this inflation is now different from during the pandemic — it’s no longer supply chain disruptions, but the cumulative effect of government policies.

Energy costs lead the way: it’s not just gasoline getting expensive

According to the weight classifications on the U.S. Bureau of Labor Statistics (BLS) CPI homepage, energy prices account for about 10% of the overall CPI, but the ripple effects of energy surges will spread to downstream sectors such as transportation, logistics, and manufacturing. Zandi observed that rising diesel prices have pushed up the costs of all trucking goods — from supermarket groceries to Amazon parcel shipping.

The airline industry is also benefiting from cost pass-through. Rising jet fuel costs are directly reflected in ticket prices. As the summer travel season approaches, airline pricing strategies further amplify the price pressures felt by consumers.

CBS poll: three-quarters of Americans feel their income is falling behind

According to a recent CBS News poll, 75% of Americans say their income growth is not keeping pace with inflation. This data reflects the direct impact of inflation on household finances — even if nominal wages are increasing, real purchasing power continues to decline.

Zandi described this as “collective psychological erosion”: it has been nearly five years since inflation last returned to the Federal Reserve’s 2% target, and public sensitivity to rising prices is accumulating.

Differences from pandemic inflation: policy vs. supply chain

In an interview with CNBC, Zandi clearly pointed out that the inflation wave of 2025-2026 has structural differences from the pandemic period:

• Pandemic inflation (2021-2022): supply chain disruptions → factory shutdowns → product shortages → passive price increases
• Policy-driven inflation (2025-2026): tariffs + war costs + fiscal spending → active cost push → businesses pass costs to consumers

The additional variable is the surge in crude oil prices driven by the Iran war. Brent crude futures have risen over 8% in May, with the pace of energy cost increases significantly outpacing the same period in 2024.

Impact on Taiwan market

The rebound in U.S. CPI affects Taiwan’s market mainly through three channels: Federal Reserve interest rate policy, the New Taiwan dollar exchange rate, and the cost of Taiwan stock index components.

If May’s data confirms a rise in inflation, the probability of the Fed cutting rates in June will further decrease. Investors can refer to previous analyses — Trump has handed the rate cut decision to Treasury Secretary Yellen, but the inflation data is Yellen’s basis for decision-making. Meanwhile, export-oriented companies like TSMC will benefit from a higher New Taiwan dollar exchange rate, though raw material costs will also rise in tandem.

The CPI data released this Wednesday will be the first key indicator for the interest rate trend in the second half of 2026.