INFLATION WATCH shows prices up more in May, and they're likely to get higher

We knew that gasoline prices kept rising throughout May, and it led to a lot of anticipation of this week’s release of overall inflation data from the Bureau of Labor Statistics. This first shoe dropped on Tuesday.

The consumer price index, a broad gauge of goods and services costs across the U.S. economy, rose at a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 4.2%, the Bureau of Labor Statistics reported Wednesday. Both numbers were in line with the Dow Jones consensus though the monthly number was 0.1 percentage point below the April reading.

Inflation climbed above 4% for the first time in three years, though the increase met expectations amid concerns over how much the surge in energy prices would impact the economy. The level was the highest since April 2023 and above the 3.8% reading from April.

However, stripping out volatile food and energy prices, the so-called core CPI accelerated 0.2% for the month and 2.9% from a year ago. While the annual rate was in line with the forecast, the monthly gain was below the 0.3% estimate and less than the 0.4% April increase.

“Americans are getting squeezed financially by inflation that’s back at a 3-year high,” said Heather Long, chief economist at Navy Federal Credit Union. “The frustration for many Americans is that so many of the basics are up in price right now -- gas, food, electricity, and medical care are all clear pain points that are above 3% inflation. Ending the war in Iran will help to moderate inflation, but the worst is likely still to come for rising food prices.”

A significant difference between now and April 2023 is that consumer inflation was on the way down 3 years ago instead of on the way up like it is today.

And in the shorter term, it looks worse. Since the end of 2022, prices have gone up more than 2% over 6-months exactly once, in February 2023. And then we started dropping bombs in the Middle East in February 2026.

Then combine the 0.5% increase of CPI with a smaller percentage increase in wages, and it means American workers fell further behind in May.

Real average hourly earnings for all employees decreased 0.1 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 0.5 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.2 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek….

In fact, average hourly wages are no higher than they were when Trump came back into office over a year ago, once you adjust for inflation.

Trump's war has wiped out an entire year and a half of wage growth

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— Ben Zipperer (@benzipperer.org) June 10, 2026 at 7:41 AM

And line workers are falling back even more than Americans in general.

Real average hourly earnings for production and nonsupervisory employees decreased 0.3 percent from April to May, seasonally adjusted. This result stems from a 0.2-percent increase in average hourly earnings combined with an increase of 0.6 percent in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Real average weekly earnings decreased 0.3 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.

But gas prices have fallen by around 10% over the last month, so maybe this rise in inflation is just a temporary thing. That's certainly what Trump/GOP is trying to sell to a public that so far isn’t buying it.

Which is why what came out today may be even worse news for Trump/GOP.

Wholesale prices rose more than expected in May, indicating that pipeline inflationary pressures are percolating higher, the Bureau of Labor Statistics reported Thursday.

The producer price index, a measure of final demand costs, increased a seasonally adjusted 1.1% on the month, putting the 12-month wholesale inflation rate at 6.5%. Economists surveyed by Dow Jones had been looking for a monthly move of 0.7%.

The annual headline inflation rate was the highest since November 2022. The monthly gain matched the April increase….

Taking out food, energy and trade services, the PPI accelerated 0.8%, the biggest one-month move since March 2022. On a 12-month basis, the core excluding trade services rose 5.1%, the most since October 2022.

So that means costs of products are going up for businesses even more than they have been for consumers. Those firms sure as hell aren’t going to eat it and cut their profits by not pushing their cost increases to consumers.

Costs were rising even more “up the line” and closer to the source material, as shown through the intermediate PPI figures.

For example, Stage 4 foods were up 2.8% in May alone and Stage 3 foods were up 4.6%. In Stage 4, this includes a 10.2% increase in grains, and for Stage 3, it includes a 5.4% increase in slaughter cattle and a 9.0% increase in raw milk. That last item might be good news if you’re a dairy farmer, but it also means higher prices when those products get to the grocery stores in the next couple of months.

Intermediate services are also costing more, as truck transportation of freight jumped by 3.4% in May (and is up 17.3% in the last 12 months), and airline passenger services went up another 2.5% (and has risen 14.4% in the last year). And in Stage 3, there were sizable May increases in wholesaling costs for metals, minerals and ores (+7.4%), chemicals and allied products (+6.0%), and food (+3.4%). So tough times for businesses as they try to get things out for sale to the public.

And if you think that June’s slight retracement at the pump is going to drop the elevated prices that are all over the US economy, well, you might be as dumb as Donald Trump in the middle of rambling about how he “loves the inflation”.

The higher PPI also tells me that the gap between wage growth and price growth will likely get larger in the coming months. Not what you want if you’re Trump/GOP and you want lower interest rates and happier workers as November approaches.

So no matter what kind of "relief rally" you see on Wall Street when Trump tries to BS about what'll happen in Iran, know that in the real America, INFLATION WATCH is going to be a thing in the US for the rest of 2026, and likely beyond. Much of the price increase is already baked in, no matter what desperate measures and speculations come.