BREAKING: Trump’s Iran Threats Are Sending Inflation Soaring to a 3-Year High
American families are getting squeezed at the gas pump, the grocery store, and the utility bill, and a new federal report makes clear who’s responsible.
The Consumer Price Index climbed 4.2% annually in May, the highest inflation rate in three years, driven primarily by a massive 3.9% spike in energy prices that pushed the 12-month energy increase to 23.5%. The numbers landed Wednesday morning exactly as President Trump renewed his threats against Iran, warning the country will “pay the price” for refusing to accept a peace deal.
The timing was not a coincidence. It was a consequence.
“Americans are getting squeezed financially by inflation that’s back at a 3-year high,” said Heather Long, chief economist at Navy Federal Credit Union. “Gas, food, electricity, and medical care are all clear pain points above 3% inflation. Ending the war in Iran will help moderate inflation, but the worst is likely still to come for rising food prices.”
While core inflation, which strips out food and energy, came in at a more moderate 2.9% annually, everyday Americans don’t get to strip out food and energy from their actual lives. Airline fares jumped 2.7%. Shelter costs, which make up more than a third of the CPI, rose 3.4% over the past year.
Markets slid on the news. Federal Reserve officials are now widely expected to hold rates steady when they meet next week, with traders pricing in the possibility of a rate hike later in the year.
New Fed Chair Kevin Warsh has suggested that AI-driven productivity gains could eventually put downward pressure on prices. But productivity gains don’t pay for gas today. And as long as Trump keeps rattling sabers with Iran and refusing to resolve a conflict that is directly fueling the energy price surge, American families will keep paying the price at every checkout line and every filling station in the country.