June in Review
Consumer inflation accelerated to 4.2% in May, the fastest pace in several years, driven largely by higher energy costs. But inflation has also begun to increase beyond energy prices. Areas such as financial services, transportation, and healthcare all experienced notable cost increases, alongside an acceleration in technology-related goods tied to AI investment. Inflation is now outpacing wage gains and household purchasing power is declining, which is likely to weigh on consumer spending.

Price pressures are even more pronounced earlier in the supply chain, with wholesale inflation outpacing consumer inflation. Wholesale inflation is extending beyond energy costs into inputs such as manufacturing materials and construction supplies. These rising upstream costs are likely to either pass through into consumer prices or strain business profit margins.