Edward Hayden-Briffett
Research Analyst, The Officials
US CPI Increase, Japanese PPI Exceeds Expectations, US Gov Deficit
US inflation jumps to 4.2% on energy costs as global producer prices rise and market volatility returns.
US CPI increased to 4.2% y/y in May, up from 3.8% in April driven by energy costs.
Gasoline prices were up over 40% but national average pump prices have now dropped about 40c from the peak a month ago. The core measure was steadier but did increase to 2.9% y/y from 2.8% in April. Trump says “I love the inflation”, despite it reaching its highest since April 2023 – Biden era!
Japan’s PPI also exceeded expectations, up 6.3% y/y – the fastest since March 2023. Chinese PPI jumped too, up to 3.9% y/y, continuing its war-driven uptrend after being negative every month from October 2022 to February 2026 (Figure 1).
The US government recorded a $293 billion budget deficit in March, almost $20 billion more than expected. VIX volatility index (Figure 2) spiked this week to highest since the ceasefire was announced in April as S&P 500 drops nearly 5% since early June.
Key data today: ECB rate decision, US PPI, jobless claims
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