Prices rose 4.2% for the year ending in May as inflation hit a three-year high, the government said Wednesday in a report that underscored the impact of war-related shocks to energy costs.
The Consumer Price Index rose 0.5% for the month, which was largely in line with Wall Street expectations. But it was the third straight monthly increase in the midterm election year.
Energy Costs Drive Inflation
Energy costs stood out as the main driver of inflation, accounting for more than 60% of the monthly all-items increase, according to the Bureau of Labor Statistics.
Shelter and food costs rose slightly. “Indexes that increased over the month include communication, airline fares, medical care, personal care, and recreation,” the report said. “Conversely, the indexes for motor vehicle insurance, household furnishings and operations, and new vehicles were among the major indexes that decreased in May.”
Rising costs and concerns about affordability have dominated the political conversation since the COVID-19 pandemic.
President Trump brushed off the rising inflation number. “No, I love it. The numbers were great. You know what I really love? I love the inflation,” Mr. Trump said in the Oval Office, before explaining he thought the numbers would drop after the war.
The report on rising inflation arrived on the heels of a positive jobs report that said the U.S. added 172,000 positions in May.
Federal Reserve Faces Complicated Picture
The dynamic presents a complicated picture to the Federal Reserve as new Chairman Kevin Warsh and central bankers mull whether to cut interest rates.
“The economic data provide little support for lower interest rates, particularly since inflation persists at high levels. Yet President Trump continues to call for lower interest rates,” said Steve Swedberg, a finance and monetary policy analyst at the Competitive Enterprise Institute.
The U.S. average price of a gallon of gas stood at $4.15 on Wednesday, down from $4.52 a month ago but up 39% from when the war started, according to the AAA motor club.
Original reporting: WMAL (Washington DC) — read the source article.
