Customers shop at Handy Market on May 14, 2026 in Burbank, California.
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Inflation rates released Wednesday are expected to cross another uncomfortable threshold as the cost of living continues to rise for U.S. consumers.
If the Wall Street consensus is correct, consumer price index inflation is expected to rise at an annual rate of 4.2%, up from an expected monthly increase of 0.5% in May. If that happens, it will be the first time since May 2023 that the CPI has exceeded 4%, and the highest since April of the same year.
Of course, much of the rise in the headline figure, which was only 2.4% a year ago, can be attributed to higher energy costs due to the Iran war.
But even core prices, which exclude food and energy, are expected to rise 2.9% annually, after rising 0.3% in May, according to Dow Jones.
inflation burst
Concerns are accelerating that the scope of the inflation explosion is widening, as soaring oil prices begin to spread throughout the economy and expectations grow that inflation will not disappear soon.
“This is not just an oil story, it’s a money supply story, and increasingly it’s an AI story,” said Liz Ann Saunders, chief investment strategist at Charles Schwab. “So this is a broader inflation issue than just energy, which means we’ll probably still see some inflation.”
Saunders added that “a lot of this grumpiness” among investors is about inflation, and that “a worse-than-expected situation probably won’t sit well with the stock market.”
The Trump administration claims that inflation will fall quickly once the fighting in the Middle East subsides.
But Mr Saunders advised against relying on that, as there has already been significant damage to supply.
“Even if the war is quickly resolved, oil prices will probably never fall to previous lows because of the major disruptions to production,” she said. “It’s not something you can just flip a switch and go back to.”
In April, the annual headline inflation rate was 3.8% and the core interest rate was 2.8%.
The Bureau of Labor Statistics will release the report at 8:30 a.m. ET.
