inflation above – Inflation measured by the Consumer Price Index is expected to run above 4% for the first time in three years, driven by the Iran war’s oil price shock and especially fast-rising gas prices. Economists project May inflation at 0.5% for the month and 4.2% from a
The next CPI print is due at 8:30 a.m. ET, and the anxiety around it has a familiar shape: gas prices, again.
Inflation is expected to run above 4% for the first time in three years. and economists point to the Iran war’s oil price shock as the driver. Fast-rising gas prices are forecast to keep weighing on the overall number in May. pushing inflation higher at a pace similar to that seen in 2021 and 2022—when inflation was on a path toward a four-decade high of 9.1%.
The projections are specific enough to make the story feel immediate. Economists expect inflation rose 0.5% in May and 4.2% from a year ago, based on FactSet estimates. That would put the three-month average at just under 0.7%, the fastest since the April to June 2022 period, when it was 0.8%.
Economists also say this round doesn’t have to match the worst stretch of that earlier inflation surge. Current projections have CPI topping out in a range of 4.5% to 5% this year. But the concern now isn’t only where the rate lands—it’s what it means for day-to-day affordability.
Common goods and services are described as significantly more expensive than they were before the pandemic, and that gap is now colliding with paychecks.
If CPI rises 4.2% in May, real (inflation-adjusted) wages are expected to decline at an annual rate of 0.8%. That means the distance between what Americans bring home and what it costs to live is not closing—it’s widening.
The ripple effects from the war-driven energy price shock are expected to show up more clearly in May’s data, even if the pattern is expected to move like a slow boil. Categories such as airfares, transportation, food, and apparel could see further increases.
Food is already sending warning signals. In April, prices of fruits and vegetables rose by 2.3%—the highest monthly increase for that category since 2010. Tomato prices, meanwhile, have risen by more than 15% for two months in a row.
Outside of food and energy, economists expect price pressures to look more muted. They’re forecasting “core” inflation rose by 0.3% in May, and the annual rate ticked up to 2.9% from 2.8% the month before.
By 8:30 a.m. ET, the numbers will either confirm the projected throwback to faster-moving inflation—or offer a different read. Either way, the question hanging over May is the same one people feel in their budgets: can paychecks keep up when prices keep jumping faster than the calendar can turn?
Iran war oil price shock inflation CPI gas prices real wages affordability fruits and vegetables tomato prices core inflation May CPI