Inflation hits three-year high
US consumer inflation accelerated to 4.2% in the 12 months through May, the largest annual gain since April 2023, the Labor Department reported Wednesday. The Consumer Price Index rose 0.5% month-over-month, matching economist expectations. Energy goods prices jumped 3.9% in May alone and 23.5% year-over-year, accounting for more than 60% of the monthly CPI increase. Gasoline prices surged 40.5% from a year ago, though they have eased slightly in recent weeks as oil prices softened.
Household budgets under pressure
Real average hourly earnings dropped 0.7% year-over-year after falling 0.3% in April, marking the second consecutive month of inflation-eroded wages. 'Americans are getting squeezed financially by inflation,' said Heather Long, chief economist at Navy Federal Credit Union. 'It's not just bad vibes about the economy now, there are real financial pressures, especially on middle-class and lower-income households.' The Fed is expected to hold rates at 3.50%-3.75% at its next meeting but may ditch its easing bias.
Amazon borrows $17.5B for AI push
Amazon secured a $17.5 billion loan facility from banks as the company continues its aggressive capital spending on AI infrastructure. The move follows a bond sale and underscores the massive financial commitments tech giants are making to artificial intelligence. Separately, the Bank of Canada held interest rates steady, seeing few signs that energy prices are broadly fueling inflation in the Canadian economy.