US inflation gauge hits three‑year high as mortgage rates climb

The Federal Reserve's preferred inflation gauge rose to a three‑year high in May, with consumer prices up 4.1% year‑over‑year, the largest annual increase since April 2023. Monthly inflation held steady at 0.4%, driven by higher gasoline prices and a surge in semiconductor and other computer component costs. Apple responded to a memory‑chip shortage linked to the AI boom by raising prices on Macs and iPads, citing an "unprecedented challenge" for the consumer‑electronics industry.

U.S. GDP was revised upward to a 2.1% annualized growth rate for the January‑March quarter, after earlier estimates of 1.6%, reflecting strong business investment tied to artificial‑intelligence projects. However, consumer spending slipped, as households curb purchases amid elevated fuel costs from the war with Iran. Mortgage borrowing costs rose, with the benchmark 30‑year fixed rate climbing to 6.49% and 15‑year rates ticking up to 5.84%. Unemployment benefit claims fell to 215,000, down 12,000 from the prior week, indicating a still‑tight labor market.