U.S. consumer prices rise by 4.2% annually in May in World Economy News 11/06/2026 U.S. consumer price growth accelerated on an annualized basis in May, driven by an uptick in gasoline prices, in the latest sign of inflationary pressures stemming from the Iran war. Headline consumer prices rose by 4.2% in the twelve months to May, accelerating from 3.8% in the preceding month and in line with expectations. It was the hottest such reading since April 2023. Month-on-month, the key inflation gauge stood at 0.5%, cooling from 0.6% in April and also meeting estimates. Stripping out volatile items like food and fuel, the Labor Department’s so-called “core” consumer price index came in at 2.9% year-on-year, slightly faster than the prior month and matching forecasts. On a monthly basis, the underlying figure eased to 0.2%, compared to 0.4% in April and projections of 0.3%. Investors have been keeping close tabs on incoming inflation data, particularly as the conflict in Iran drags on into its fourth month. Despite diplomatic efforts to end the fighting, a shaky ceasefire has taken hold. Crucially, the Strait of Hormuz has remained effectively closed to tanker traffic, depriving the world of key oil supplies and pushing up crude prices. Worries have abounded that an energy shock caused by the war will, in turn, spark a burst of inflation. In the U.S., Americans have been particularly feeling this impact at the gas pump. Month-on-month, gasoline prices jumped by 7% in May. On an unadjusted 12-month basis, the figure has surged by 40.5%. Markets have increasingly bet that hotter U.S. inflation, coupled with data showing a resilient labor market, will persuade the Federal Reserve to hike interest rates this year. Meanwhile, wagers at the beginning of 2026 that the Fed would embark on a rate-cutting cycle have been all but eradicated. “T]he Fed’s next move may need to be a hike, and not a cut as many had expected coming into this year. The stock market has been climbing a wall