10 June 2026
If you are covering the latest US inflation data, please find below a comment from Lindsay James, investment strategist at Quilter:
“The US saw a fairly big jump in inflation for May, climbing from 3.8% to 4.2%. Energy was the big driver reflecting higher gasoline prices and represented 60% of the increase we have seen, although food and shelter price rises also contributed. Naturally core CPI, which strips out food and energy costs, was more moderate and at least remains in the 2%-3% range, although at the very top of it at 2.9%. The US arguably has an inflation problem entirely of its own making, and it won’t be easy to resolve it and completely unwind the price rises we have seen this year to date.
“Gasoline prices remain up almost 50% in 12 months in some states, and even if the US and Iran can come to some sort of resolution, the price rises are increasingly looking higher for longer. Together with strong jobs data, which came in well ahead of expectations last Friday, that is leading to calls for rate hikes, with a quarter point rise now priced in by year end and the potential for more in 2027.
“That said, oil prices have eased a little in June, bringing gasoline prices down a touch as more crossings through the Straits of Hormuz have been recorded and the ceasefire continues to see verbal commitment, if more in word than deed. Something much more concrete is required to properly move the needle.
“A rate hike is the very opposite of what the White House wants and expects from the new Fed Chair Kevin Warsh, who will Chair the highly anticipated first FOMC meeting next week (16-17 June). The market expects little change to begin with, with rates held flat at 3.5-3.75%, a decision that is ultimately down to a Committee vote, but the statement will provide clues as to how signals, such as the dot plot and economic projections, are likely to change. Warsh, though, is not a fan of forward guidance, making the future path for rates more uncertain.”
