---
title: "Fed sees inflation hitting 4.2% as stagflation risks grow"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/286642090.md"
description: "The Cleveland Fed forecasts a 4.2% rise in May CPI, the highest in over a year, with CEOs expecting high prices until 2027. Wages increased by 3.6% from April 2025 to April 2026, lagging behind inflation at 3.8%, reducing purchasing power for lower-income households. There is a 40% chance of stagflation by the end of 2026 due to energy shocks, persistent inflation, and slowing growth."
datetime: "2026-05-16T10:07:29.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/286642090.md)
  - [en](https://longbridge.com/en/news/286642090.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/286642090.md)
---

# Fed sees inflation hitting 4.2% as stagflation risks grow

Inflation forecast jumps: The Cleveland Fed expects May CPI to climb 4.2%, the highest annual increase in over a year, with CEOs projecting elevated prices well into 2027. Wages lag prices: From April 2025 to April 2026, wages grew 3.6% while inflation reached 3.8%, cutting purchasing power, especially for lower-income households hit by high energy costs. Stagflation risk rises: Prediction markets now give a 40% chance of stagflation by year-end 2026, as energy shocks, sticky inflation, and slowing growth create a challenging policy environment.

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