**Headline Inflation Hits 4.2% in May as Labor Market Signals Shift**
The Consumer Price Index (CPI) for May was released, showing a headline inflation rate of 4.2% year-over-year, matching expectations. This marks the highest inflation rate since April 2023 and the first time it has crossed the 4% threshold in three years. The monthly increase slowed to 0.5% from 0.6% in April, while core CPI—excluding food and energy—rose by just 0.2%, lower than the predicted 0.3%.
In related labor market news, the number of job openings per unemployed worker has risen above 1.0, indicating more available jobs than job seekers. Nonfarm payrolls increased by 172,000 in May. Federal Reserve Chair Kevin Warsh, who took office on May 22, faces a June FOMC meeting with inflation above target and a labor market strengthening, raising market expectations for a potential interest rate hike, now pegged at roughly 66% likelihood before year-end.
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