On June 10, 2026, the Bureau of Labor Statistics released the Consumer Price Index for May, showing headline inflation rising to 4.2% year over year, the highest level since April 2023, and up from 3.8% in the previous month. While the annual figure marks a third consecutive month of inflation increases, the details of the report were more encouraging than the headline suggests.
The pace at which prices increased over the month slowed down, rising 0.5% in May compared to 0.6% in April. Core CPI, which excludes food and energy prices, increased just 0.2% for the month, lower than the 0.4% increase in April. After several months of accelerating inflation, this report is the first clear sign that inflation may be starting to level off.
A key takeaway is where inflation is coming from. In the release, the BLS explained that over 60% of the increase in prices came from energy, especially higher gas and fuel costs caused by global supply issues. Outside of energy, price pressures appear to be easing. Core inflation rose 2.9% over the past year, only slightly higher than April’s 2.8%. In addition, approximately 60% of goods and services in the CPI increased at an annualized pace below the Federal Reserve’s 2% target. Earlier in the year, that number was only about 46%. This matters because when inflation is driven by one area like energy, it is more likely to be temporary than if it were spread across the entire economy.
One concern in the report is how inflation is affecting consumers. After adjusting for inflation, average hourly wages fell 0.7% compared to a year ago. This is the largest drop in over three years. As a result, people’s buying power is shrinking, which could reduce spending over time. Since consumer spending is a key driver of economic growth, this is something to watch closely.
Overall, this report suggests that inflation may be near a turning point. While the overall rate is still high, most of the pressure is coming from energy, and other prices are starting to cool down. If energy prices settle, inflation may begin to fall in the coming months. For investors, this is a cautiously positive sign. Inflation may be improving, but it will likely take time before it returns to normal levels.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.