David Kelly, chief global strategist at JPMorgan Asset Management, believes May 2026 may ultimately be remembered as the peak of the current inflation cycle despite a noticeable increase in consumer prices. His assessment follows the latest U.S. inflation report, which showed headline inflation accelerating to 4.2% year-over-year and rising 0.5% from the previous month, largely driven by higher energy costs linked to tensions and disruptions stemming from the conflict involving Iran.

While the headline figure drew attention, Kelly pointed to softer underlying inflation trends as a reason for optimism. Core CPI, which excludes volatile food and energy prices, increased by just 0.2% month-over-month, coming in below many expectations. According to Kelly, that data suggests broader inflationary pressures may not be accelerating as rapidly as the headline number implies.

Looking ahead, the JPMorgan strategist expects inflation readings to improve in the coming months as gasoline prices decline and energy markets stabilize. If those trends continue, the Federal Reserve could find itself in a position to keep interest rates steady rather than pursue additional tightening, offering investors and consumers hope that the worst phase of the inflation cycle may be nearing an end.