U.S. Households Spent $750 More on Average After 100 Days of Iran Conflict

U.S. households spent an average of $750 more on expenses in the first 100 days after U.S. and Israeli strikes on Iran began February 28, according to Moody's Analytics. Energy costs accounted for $447 of the increase. Petrol prices rose to $4.22 per gallon for regular fuel on June 6, the American Automobile Association reported.

The price stood at $2.98 per gallon on February 28. Iran responded by attacking regional energy infrastructure and restricting tanker traffic through the Strait of Hormuz, which carries one-fifth of global oil and gas exports.

Inflation and consumer response Overall inflation measured by the Personal Consumption Expenditures index reached 3.8 percent in the latest reading, up from 3.5 percent the prior month, the Commerce Department said. Energy prices rose 5.5 percent in the same period.

A University of Michigan survey recorded consumer sentiment at 44.8 in May, down from 49.8 in April. The Conference Board reported that two-thirds of consumers reduced spending because of higher costs. Twelve percent of respondents in an American Muscle survey said they now work from home more often, while 44 percent in a Washington Post/ABC News Ipsos poll said they drive less.

Food prices and mortgage rates Food prices increased 0.5 percent in April, the largest monthly gain since November 2022, Labor Department data showed. Meat prices rose 1.3 percent and fruit and vegetable prices rose 1.8 percent. Tomato prices jumped 15 percent in March from the previous month.

The World Bank projects fertilizer prices will rise 31 percent by year-end, with urea up 60 percent. The average 30-year fixed mortgage rate increased to 6.5 percent in late May from 5.98 percent in February, as Treasury yields rose with inflation expectations.