Inflation Hits 3-Year High As Affordability Challenge For Americans Grows

U.S. inflation rose to a three-year high in May, driven by higher gas prices and broad price gains that outpace wages. The Labor Department reported a 4.2% year-over-year increase in consumer prices, up from 3.8% in April, with monthly inflation at 0.5%. Excluding volatile food and energy, the core rate rose 0.2% for the month and 2.9% from a year earlier. Gasoline prices climbed, while airline fares jumped about 2.7% in May and remain roughly 27% higher than a year ago. Housing-related costs, electricity, clothing, and groceries all showed notable gains. Economists warned inflation remains stubborn, complicating Federal Reserve policy, as markets anticipate potential rate moves later in the year. The report also noted consumers dipping into savings to sustain purchases amid rising debt and rising energy costs.