Inflation likely reached 3-year high last month as Iran war spikes gas prices
Summary
Inflation in the U.S. is expected to have reached its highest level in three years last month, mainly due to rising gas prices caused by the war in Iran. Prices increased by about 4.2% compared to a year earlier, making it harder for people to afford everyday goods and creating challenges for President Trump’s administration.Key Facts
- Inflation likely rose 4.2% in May compared to the previous year, up from 3.8% in April.
- Monthly prices probably increased by 0.5% in May.
- Rising gas prices are linked to the Iran war, which affected global oil supply by blocking the Strait of Hormuz.
- Gasoline prices rose from around $4.04 per gallon in mid-April to $4.49 in mid-May but have since dropped to about $4.16.
- Inflation had started to slow down before President Trump imposed tariffs in April 2025, which raised the cost of many goods.
- Core inflation, which excludes food and energy prices, is expected to have risen 0.3% in May and stands at an annual rate above the Federal Reserve’s 2% target.
- Some prices, like dental care and car repairs, remain high even though wages are only growing slowly.
- Higher diesel fuel prices have increased shipping costs, causing companies to add extra fees.
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