Blitz Bureau
NEW DELHI: US consumer inflation increased at its fastest pace in three years in May, boosted by surging prices for energy products amid the Middle East conflict, and giving more ammunition for the Federal Reserve to keep interest rates unchanged into 2027.
The third straight month of strong increases in the Consumer Price Index reported by the Labor Department on June 10 underscored the mounting pressure on households that are increasingly tapping their savings to fund spending.
Inflation eroded wages for a second consecutive month in May, which could weigh on overall economic growth. The soaring cost of living is a political liability for President Donald Trump and his Republican Party, seeking to retain control of Congress in the midterm elections in November. Trump won the 2024 presidential election in large part because of his promise to lower inflation, but has seen his approval rating tumble as frustration mounts over his handling of the economy.
Asked about the rising price pressures, Trump told reporters, “I love the inflation,” adding that “it’s going to come down like a rock” when the USled war with Iran ends. The Consumer Price Index increased 4.2 per cent in the 12 months through May, the largest gain since April 2023, the Labor Department’s Bureau of Labor Statistics said.
All inflation measures are running well above the Fed’s target. Real average hourly earnings dropped 0.7 per cent in the 12 months through May after falling 0.3 per cent in April. “Americans are getting squeezed financially by inflation,” said Heather Long, chief economist at Navy Federal Credit Union.
Gas prices
A 3.9 per cent jump in the price of energy goods accounted for more than 60 per cent of the rise in the monthly CPI. Energy prices rose 3.8 per cent in April. They vaulted 23.5 per cent in the 12 months through May. Gasoline prices accelerated 7.0 per cent over the month and were up 40.5 per cent from a year ago.
