Consumer prices climbed 4.2% over the year in May, the sharpest annual increase since April 2023, according to analysis published June 15, 2026, by the National Association of Manufacturers. The report shows inflation accelerating from April's 3.8% annual rise, driven primarily by soaring energy costs that continue to put pressure on households and businesses alike. Monthly inflation also ticked up 0.5% from April to May, underscoring the persistence of price pressures even as the Federal Reserve maintains its 2.0% target.
Energy costs surged 23.5% over the year in May, a sharp acceleration from April's 17.9% year-over-year increase, with the energy index climbing 3.9% in just the month of May alone. Gasoline prices rose 7.0% month-over-month and jumped 40.5% compared to May 2025, while fuel oil prices increased 3.8% over the month and spiked 58.9% year-over-year. Electricity prices stepped up 0.6% in May and grew 5.9% from the previous year, though natural gas prices dipped 0.5% over the month while still posting a 3.0% annual gain. Core CPI, which strips out volatile energy and food prices, rose more modestly at 0.2% month-over-month and 2.9% annually, up slightly from April's 2.8% 12-month increase.
Food prices showed more restrained growth, ticking up 0.2% in May and rising 3.1% over the year, down slightly from April's 3.2% annual advance. Prices for food at home increased 2.7% year-over-year while food away from home climbed 3.5% annually. Within specific food categories, beef and veal surged 12.9%, coffee jumped 17.5%, and fresh vegetables rose 11.9% compared to May 2025. Shelter costs climbed 0.3% month-over-month and 3.4% year-over-year, while used car and truck prices ticked up 0.1% over the month but remained 2.0% lower than a year earlier. New vehicle prices dropped 0.3% in May but inched up just 0.2% annually, even as motor vehicle maintenance and repair costs increased 6.1% over the year.
The report attributes rising inflation pressures to the war in the Middle East, which has pushed energy costs sharply higher and kept the headline inflation rate well above the Federal Reserve's 2.0% target. The NAM notes that inflation continues to rise from its 2025 lows, creating a challenging environment for policymakers who've held interest rates steady. Federal Reserve officials kept their interest rate target unchanged at their April meeting, and markets expect the Federal Open Market Committee will maintain that stance at next week's meeting as risks to the Fed's inflation mandate mount. The persistence of elevated energy costs—particularly the 40.5% annual jump in gasoline and 58.9% surge in fuel oil—means households face substantially higher costs for basics like commuting and heating, while manufacturers contend with increased input expenses that squeeze profit margins.
The outlook remains uncertain as inflation risks continue to build, with the Federal Reserve expected to hold rates steady while monitoring whether energy-driven price pressures spread more broadly through the economy. For now, the combination of a 4.2% headline inflation rate and ongoing geopolitical tensions suggests relief won't come quickly, leaving both consumers and businesses bracing for sustained cost pressures in the months ahead.