Inflation has reached a 3-year high, with consumer prices jumping 4.2% in May compared to the same time last year. The increase is attributed to rising gas prices, which have been affected by the Iran war and the subsequent closure of the Strait of Hormuz. Gas prices rose from $4.04 in mid-April to $4.49 in mid-May, according to the Energy Information Administration.

Economic Impact

The rising inflation has led to concerns among Federal Reserve policymakers, who are now considering a rate hike to combat the increasing prices. The annual increase in inflation is up from 3.8% in April, and the monthly increase is 0.5%, slightly below the 0.6% increase in April. Core inflation, which excludes food and energy categories, rose 0.2% in May from April.

The Iran war has also led to higher shipping costs, with companies like UPS and FedEx adding fuel surcharges. This has resulted in higher grocery prices, which jumped 0.7% in April and are 2.9% higher than a year ago. Some economists worry that prices are still elevated in areas that should be unaffected by gas costs, such as dental care and motor vehicle repair.

Despite the rising inflation, the job market appears to be improving, with hiring increasing to a healthy level in May. The economy is still growing, and these positive signs suggest that the Federal Reserve may not need to cut rates to stimulate growth and hiring.

Original reporting: NBC Connecticut — read the source article.