May inflation – U.S. inflation data due Wednesday morning is expected to show another jump in the consumer price index, with analysts pointing to energy costs linked to the Iran war—and warning that higher prices could spread well beyond oil.
On Wednesday morning at 8:30 a.m. ET, the Consumer Price Index report will land with a question many Americans feel every time they scan a grocery bill or fill a gas tank: is inflation easing, or just shifting form?
The Wall Street consensus expects the CPI to run at a 4.2% annual rate in May after a projected 0.5% monthly gain. If that comes to pass, it would be the first time the CPI has moved above 4% since May 2023, and the highest reading since April of that year.
So much of the pressure in the headline number is expected to come from energy. The report’s headline inflation rate was 2.4% a year ago. and economists expect the May jump to reflect higher energy costs tied to the Iran war. Still, even the parts of inflation that exclude food and energy are forecast to stay elevated.
Core prices—CPI measures that exclude food and energy—are projected to rise to a 2.9% annual reading after increasing 0.3% in May, following a 2.4% year-ago headline rate. Dow Jones data is cited in the source as the basis for the core forecast.
That’s where the worry is shifting. The argument on Wall Street isn’t only about oil prices. Liz Ann Sonders. chief investment strategist at Charles Schwab. put it directly: “It’s not just an oil story. it’s a money supply story. and it’s increasingly an AI story.” She added that this points to a “broader inflation problem than just energy. ” which means inflation may prove “somewhat sticky.”.
Sonders also warned that investor nerves are tied to inflation itself. “A lot of this skittishness” from investors is about inflation, she said, and “something worse than expected probably doesn’t sit well with the equity market.”
The Trump administration has been making a different bet: inflation will fall quickly once fighting in the Middle East settles down. But Sonders advised against relying on that timeline, citing the difficulty of reversing supply damage. “Even if there would be a quick resolution to the war. you probably wouldn’t see oil prices come down to prior lows. because there’s been so much disruption to production. ” she said. “That’s not something that a switch can just be turned back on.”.
The stakes are sharpened by what came before. Annual headline inflation was 3.8% in April, while the core rate stood at 2.8%.
All eyes are now on the next set of numbers—whether inflation is confined to energy again, or whether the broader climb starts to look more permanent. In a market that has been reacting to every hint of “sticky” price pressure, Wednesday’s 8:30 a.m. ET release could set the tone for weeks.
May inflation CPI consumer price index core inflation Bureau of Labor Statistics energy costs Iran war Liz Ann Sonders Charles Schwab oil prices