U.S. consumer prices rose 4.2 percent over the 12 months ending in May, the fastest annual pace in three years and a reading that rekindled debate over how much further the Federal Reserve can ease.

The Bureau of Labor Statistics reported that the all-items index climbed 0.5 percent in May alone, lifting the year-over-year rate from 3.8 percent in April. The acceleration was broad-based, with shelter, energy and core goods all contributing to the advance.

Core inflation, which strips out food and energy, told a more mixed story. The core index rose 0.2 percent month over month, a downshift from April's 0.4 percent gain and somewhat softer than economists had projected, suggesting underlying price pressures may be stabilizing even as headline figures jump.

The report arrives at a sensitive moment for monetary policy. With the Fed holding rates in a 3.50% to 3.75% range and officials openly divided, a sustained pickup in inflation could force a longer hold, while a quick reversal would revive easing expectations.

Economists cautioned against overreading a single month. Base effects and volatile energy costs can distort annual comparisons, and some forecasters expect the May print to prove an outlier as supply-chain normalization continues.

Attention now turns to the June reading, due July 14. That release will be the last major inflation print before the Fed's next policy meeting and could prove decisive in shaping the committee's near-term direction.

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