US inflation accelerated in May, with CPI rising 4.2% year-on-year, the fastest pace in more than three years. The increase was mainly driven by higher energy and gasoline prices linked to the Middle East conflict, while core CPI rose a softer 0.2% on the month, suggesting the shock has not yet spread widely across the economy. Food inflation was more mixed, with groceries up only slightly. The data keeps pressure on the Federal Reserve to hold rates higher for longer, although the softer core reading reduces the immediate need for a rate hike. Markets reacted cautiously, with US stocks lower and Treasury yields little changed to slightly higher.