#USMayCPIHits3YearHigh

4.2% inflation isn't a spike. It's a pattern.

The May CPI report just landed—and it’s the kind of number that makes economists pause and families nod quietly.

Headline CPI: +4.2% year over year
Highest since April 2023. Up from 3.8% in April.

Here’s what actually moved the needle:
➜ Energy prices jumped 3.9% month over month
➜ That single category accounted for over 60% of the entire headline gain

So yes, inflation is back in the conversation—but not the way you might think.

Core CPI (ex‑food & energy) rose only 0.2% monthly – below expectations.
Year over year, core is at 2.9%, which is still elevated but not screaming.

Translation:
The economy isn't burning everywhere.
But the fuel gauge? That's flashing red.

Markets noticed.
Odds of a Fed rate hike this year just climbed to ~43%, according to CME FedWatch.

And here's the twist:
The Fed’s June 17 meeting will be the first rate decision under new Chair Kevin Warsh.
No playbook. No track record at the helm during a hot inflation print.

Add the Strait of Hormuz closure (20% of global oil shipments at risk) and you’ve got a powder keg.

Three things to watch now:

Will energy prices cool, or is $100 oil coming?

Does Warsh lean hawkish out of the gate?

How long before “transitory” gets retired for good?

Inflation isn't dead. It just changed costumes.

👇 What's your read – hike or hold in June?