U.S. Inflation Hits 4.2% in May, Highest Since 2023 Amid Iran Conflict
Consumer prices rose 4.2% year-over-year in May, the third straight monthly increase and the first reading above 4% in three years. Energy costs drove the jump after the Strait of Hormuz closure cut oil supply.
ABC NewsU.S. consumer prices rose 4.2% in May from a year earlier, the highest annual rate since April 2023 and the third consecutive monthly increase. Energy prices climbed 23% over the same period. The average price of a gallon of gasoline reached $4.15 as of June 10, up $1.17 since the conflict began on Feb. 28.
Iran closed the Strait of Hormuz after military clashes escalated, blocking a route that carries roughly one-fifth of global oil supply. The resulting shortage produced one of the largest oil price spikes on record. Diesel costs also rose, increasing transportation expenses for food distributors. Grocery prices followed, with tomatoes up 32%, seafood up 6%, and beef up nearly 13% year-over-year.
Futures markets assign a high probability that the Federal Reserve will leave interest rates unchanged at its meeting next week. The session will be the first chaired by the central bank's new leader, who previously served as a governor and has described inflation surges as harmful to lower-income households.
" — Central bank leader, April confirmation hearing (ABC News) Officials have not indicated whether the latest data will alter that stance.
