BlackRock warns of energy shock as May CPI is set to show acceleration in inflation
Summary
BlackRock is watching the May U.S. CPI release for the first clear sign of how the U.S.-Iran conflict is affecting already elevated inflation. Economists expect CPI to rise 4.2% year over year, up from 3.8% in April and the fastest pace since April 2023. That would reinforce that inflation remains far above the Fed’s 2% target and could increase the odds of rate hikes rather than cuts. Higher rates would likely pressure risk assets, including crypto, with Bitcoin already down sharply last week. A key concern is a prolonged closure of the Strait of Hormuz into July, which could intensify the energy shock and, with U.S. oil inventories potentially at four-decade lows, push inflation higher.
