Consumer Price Index for May: Live Updates

Economists, policy makers and investors will be watching May’s consumer-price index reading closely for signs that inflationary pressures are ebbing.

Heightened inflation is likely to put pressure on the Fed to lift interest rates quickly in an effort to temper rising prices. Fed officials are largely expected to raise the central bank’s key interest rate by half a percentage point next week and replicate that in July.

“The big picture is that inflation remains very stubborn and will continue to be very slow to recede,” said Sarah House, senior economist at Wells Fargo Securities. “With what we see in energy markets in the past few weeks, we are unlikely to have seen the peak in inflation this cycle yet.”

Energy prices rose in May as Russia’s invasion of Ukraine continued to push up prices for crude-oil and natural gas. Gasoline prices have breached record levels in recent weeks, with the average gallon of regular unleaded currently going for $4.97, according to AAA. The strength in energy price rises will keep putting upward pressure on inflation, said Ms. House.

“Given everything from the implications of the Russian invasion of Ukraine, the Chinese lockdowns and just the sheer appetite for travel…what we’ve seen is the perfect storm of those factors hitting, along with some major refinery closures,” she said.

Consumers’ grocery bills have risen by an annual rate of more than 10% since earlier this year, a pace last seen in the early 1980s. Food prices are up broadly, unlike early in the pandemic when meat prices drove much of the increase, said Paul Ashworth, chief North America economist at Capital Economics.

“It’s not just the weather—it’s diseases affecting citrus trees and chickens. It’s the Ukraine conflict,” which has affected prices for baked goods and cereals, he said.

“For people on lower incomes this is not discretionary spending,” Mr. Ashworth said.