US inflation accelerated to its highest level in more than three years in May, with the Personal Consumption Expenditures (PCE) price index rising 4.1% year-on-year.
The figure, released Thursday by the Bureau of Labor Statistics, marks a significant uptick from the 3.8% reading recorded in April, signaling that price pressures are intensifying rather than receding.
The surge in the Fed’s preferred inflation gauge is largely driven by persistent energy cost increases.
Ongoing geopolitical tensions, particularly the conflict in Iran, continue to disrupt supply chains and push fuel prices higher, directly impacting consumer spending.
This second consecutive month of elevated inflation data suggests that the disinflationary trend has stalled, posing a fresh challenge for monetary policymakers.
Markets are likely to reassess the timeline for future Federal Reserve rate cuts in light of the hotter-than-expected data.