US inflation accelerates to three-year high as May CPI hits 4.2%

Consumer prices in the United States increased by 4.2% on an annual basis in May, according to data released by the Bureau of Labor Statistics. The figure represents the highest annual gain in three years, highlighting the persistence of inflationary pressures within the American economy.

The reported inflation rate aligned precisely with the Dow Jones consensus estimate, suggesting that market participants had largely priced in the current trajectory of price growth. The alignment between the actual data and analyst forecasts indicates a degree of predictability in the near-term inflation outlook, despite the elevated levels.

This latest reading from the US Bureau of Labor Statistics comes at a time of significant activity across financial markets. Institutional investors have continued to engage in heavy buying of NVIDIA shares, driven by strong earnings reports from the semiconductor giant. The robust performance in the technology sector contrasts with the broader macroeconomic challenge of rising consumer costs.

In related corporate developments, Amazon reported a 12% year-on-year increase in revenue for the fourth quarter of fiscal 2025, reaching $213.4 billion. The company also recorded $25 billion in operating income, contributing to a 31.9% rise in its share price over the preceding month. These earnings figures demonstrate the resilience of major US corporations even as inflation remains above target levels.

Meanwhile, regulatory and political developments continue to unfold alongside economic data. The US Justice Department has dropped a criminal probe into Federal Reserve chair Jerome Powell, a move that removes a potential distraction for the central bank as it navigates monetary policy decisions. The Federal Reserve remains focused on balancing these economic indicators to achieve its dual mandate of price stability and maximum employment.