Inflation is back above 4% for the first time since 2023—but Kevin Warsh might catch a break

Consumer prices rose 0.5% in May, the Bureau of Labor Statistics reported Wednesday, lifting annual inflation to 4.2% from 3.8%—the first 4%-handle increase in three years.But the heat was mostly contained in energy. Energy accounted for more than 60% of the monthly damage, with gasoline jumping 7% from April and 40.5% over the year as the war in Iran chokes the Strait of Hormuz and drives oil higher.

If you strip out food and energy from the “core” CPI, it rose just 0.2% and 2.9% over the year, softer than expected and suggesting that the spillover was relatively limited. That’s the number the Fed actually watches, and it isn’t flashing the overheating signs that could force its hand.

Overheating was the fear with this print, not just from the Iran war but with AI. Chicago Fed President........

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