President Donald Trump and Kevin Warsh during his swearing in ceremony as the Federal Reserve chairman at the White House on May 22, 2026. Madalina Kilroy/The Epoch Times
Commentary
In the wake of strong payroll growth in the past three months, fears of “demand push” inflation are brewing, and we saw some evidence of that last week, when the Labor Department announced on Wednesday that the Consumer Price Index (CPI) rose 0.5% in May and 4.2% in the past 12 months. The core rate, excluding food and energy, rose 0.2% and 2.9% in the past 12 months. Energy prices rose 3.9% in May, causing most of the increase. Owners’ equivalent rent (shelter costs) rose 0.3% in May, which was a big retreat from 0.6% in April. Treasury yields declined after the CPI report, which is positive. Then, on Thursday, the Labor Department announced the Producer Price Index (PPI) surged 1.1% in May and 6.5% in the past 12 months. The core PPI, excluding food, energy, and trade services, rose 0.8% in May and 5.1% in the past 12 months. Wholesale food prices rose 0.6%, while energy prices surged 10.7% and trade services declined 1.1%. Unfortunately, wholesale processed goods prices soared 3.5%, the largest monthly increase since March 2021. The good news is that much of this inflation is tied to energy prices, so this inflation surge may be transitory, especially if the new peace deal with Iran works out.
