Inflation Hits 4.2% in May, Reaches Three-Year High on Gas Prices
7 verified2 unconfirmed
Consumer prices rose 4.2% in May from a year earlier, the highest annual inflation rate in more than three years, according to a Labor Department report released Wednesday. The increase was driven primarily by soaring gasoline prices tied to the U.S. war with Iran and the disruption of oil shipments through the Strait of Hormuz. On a monthly basis, prices increased 0.5%, with higher energy costs accounting for more than 60% of that rise. Core inflation, which excludes volatile food and energy categories, stood at 2.9% for the 12 months ending in May, slightly higher than the previous month. Gasoline prices have eased in recent days amid hopes of a negotiated settlement, but the national average remains about $4.15 to $4.16 per gallon, roughly $1.17 above pre-war levels. The report presents a challenge for the Federal Reserve, as stubborn inflation reduces the likelihood of near-term interest rate cuts despite a stabilizing job market.
What’s verified
Consumer prices rose 4.2% in May from a year earlier, the largest annual increase since April 2023.
On a monthly basis, prices rose 0.5% in May.
Core inflation (excluding food and energy) was 2.9% for the 12 months ending in May.
Gasoline prices have increased by more than $1 per gallon since the start of the U.S.-Iran war, due to disruption in the Strait of Hormuz.
Average wages have risen 3.4% over the last year, trailing inflation and reducing real spending power.
The job market showed improvement, with employers adding 172,000 jobs in May.
Gasoline prices have recently eased but remain near $4.15–$4.16 per gallon nationally.
Not yet confirmed
One report noted that core prices rose 0.2% month-over-month in May, while economists had forecast a 0.3% increase. The other source did not provide a monthly core inflation figure.
The exact timing and details of potential negotiations between the U.S. and Iran regarding the Strait of Hormuz remain unspecified.
Key figures
Federal Reserve Chair Kevin Warsh
Former Fed Chair Jerome Powell
President Donald Trump
Sources: NPR, abcnews.com
