Consumer prices rose 4.2% annually in May, driven by rising gas prices amid the Iran war, marking the third consecutive monthly increase.
7:00 PM
Consumer prices in the United States rose 4.2% in May from a year earlier, the Labor Department reported Wednesday, marking the highest inflation rate in three years. The increase came up from 3.8% in April and represents the third straight monthly rise in the annual inflation rate.
On a monthly basis, prices rose 0.5% in May, following larger gains of 0.6% in April. Rising gas prices were a primary driver of the inflation spike, as fuel costs moved upward in response to disruptions in global oil supply and demand related to the ongoing conflict with Iran.
The inflation surge presents a challenge for the Federal Reserve and a potential political concern for the Trump administration as midterm elections approach. Gas prices fluctuate in response to various global events, including conflicts, sanctions, and decisions by major oil-producing nations, all of which can limit or create uncertainty about oil supply.
President Trump responded to the inflation report on Wednesday, telling reporters in the Oval Office that he loved the inflation numbers. In a subsequent phone interview with The Post, Trump clarified his remarks, saying he was taken out of context. He stated that he actually loved the fact that inflation was not higher than it was, given the circumstances of the war.
Trump predicted that the 4.2% annual inflation rate recorded in May would represent the peak of price increases associated with the Iran war. He said in the interview that "the numbers are going to be phenomenal because what's showing is that despite the fact that we're in a war, the numbers are much lower than anticipated, and when we're out of that war, the numbers will be at lower numbers than they were even before it started."
In public remarks, Trump called the latest inflation numbers "great" and insisted that prices will "come down like a rock" once the war with Iran ends. He also claimed for the first time that U.S. forces are moving millions of barrels of oil nightly through the Strait of Hormuz.
Consumer prices rose at their fastest annual rate since April 2023, driven largely by energy costs tied to the Iran war and Strait of Hormuz disruptions.
First-quarter economic growth accelerated to 2%, driven by AI investment and government spending, while consumer spending weakened amid Iran war energy costs.
President Trump acknowledged higher fuel costs will persist for a period but said the conflict has had less economic impact than anticipated.
Oil prices surged Tuesday following U.S. military strikes in southern Iran targeting missile launch sites and vessels. Iran pledged to retaliate.
Brent crude and U.S. futures advanced Monday amid escalating Middle East tensions and record-low global inventories.
The U.S. Trade Representative concluded a Section 301 investigation, proposing 25% tariffs on most Brazilian imports while exempting coffee, beef, and aircraft.
