US inflation tops 4% for first time in three years, keeping Fed hike in play

US inflation rose to 4.1% in May, the highest in three years, driven by higher energy prices, keeping the Federal Reserve's September interest rate hike on the table. Despite this, consumer spending surged due to tax refunds and a stock market rally, while business investment in equipment, particularly AI-related technology, rebounded. The mixed signals reinforce expectations of tighter global monetary conditions, which could pressure emerging markets including India through FII outflows and a stronger dollar.