Inflation likely jumped in May as Iran war sent prices higher
NBC News • • general
Key Points:
- Inflation in the U.S. is expected to have risen for the third consecutive month in May, driven primarily by higher energy prices linked to the war with Iran, with the Consumer Price Index forecasted to show an annual rate of 4.2%.
- Oil prices surged nearly 40% since the conflict began, briefly exceeding $115 per barrel in April, causing gasoline prices to remain about 40% higher than pre-war levels despite recent declines.
- Energy stockpiles are depleting rapidly due to supply disruptions in the Strait of Hormuz, raising concerns that prices could spike again if reserves reach critically low levels by the end of June.
- Core inflation, excluding food and energy, is expected to hover near 3%, with analysts warning that inflationary pressures from rising energy costs and supply chain disruptions may soon spread to broader consumer goods.
- The Federal Reserve is closely monitoring inflation amid a strong labor market, with policymakers considering interest rate hikes possibly as early as October to counter persistently elevated inflation risks.