Inflation is spreading through the U.S. economy beyond the pump

Gasoline prices are above $4 per gallon amid Middle East conflict and Strait of Hormuz closure, while May 28 price data raises concern about broader economic spread. Month-to-month inflation rose less than expected, but year-over-year inflation increased 3.8%, the fastest pace since 2021. A less volatile measure excluding food and energy rose 3.3% year over year. Underlying inflation remains elevated as housing, utilities, and recreational spending contribute, even as other indicators show a slowing economy and weaker income growth. The Personal Consumption Expenditures Price Index is released by the Commerce Department’s Bureau of Economic Analysis, with headline PCE at 3.5% year over year in March 2026 versus 2.8% in February. Core PCE, excluding food and energy, is rising as well and is treated as a better predictor of where inflation is headed for Federal Reserve policy.

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