Inflation hits highest level since 2023, as the Iran war pushes up prices

Inflation rose for a third consecutive month, in line with expectations.

Inflation jumped for a third consecutive month as the Iran war continued to drive up prices in May, surpassing 4% for the first time in three years. The reading matched economists' expectations.

Prices rose 4.2% in May compared to a year earlier, increasing 0.5% from the prior month, U.S. Bureau of Labor Statistics data showed.

Speaking in the Oval Office on Wednesday, President Donald Trump dismissed price concern raised by the government report, saying, "No, I love it. The numbers were great."

"You know what I really love? I love the inflation," Trump added, saying prices would fall after the resolution of the Iran war. Trump said that millions of barrels of oil were being exported from the Middle East.

"You know why? Because as soon as this war is over, you know I can say it now...you know we've been taking out millions of barrels of oil."

Trump has often that as soon as the war is over, he believes energy prices, a major inflationary trigger, will decline rapidly.

"Prices of prescription drugs, dairy products, cars, as well as both health and auto insurance continue to decline thanks to the Trump administration's policymaking. The Administration will continue pushing our affordability agenda to enable Americans to keep more of their hard-earned money," Desai said.

The Middle East conflict prompted the Iranian closure of the Strait of Hormuz, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff triggered one of the largest oil shocks ever recorded.

Energy prices -- a broad index that includes gasoline -- soared 23.5% in May compared to a year earlier, data showed.

The average price of a gallon of gas stood at $4.15 as of Wednesday, AAA data showed -- an increase of $1.17 per gallon since the war began on Feb. 28. That amounts to a nearly 40% price jump in about three-and-a-half months.

The oil shortage also drove up diesel prices, putting upward pressure on grocery prices. Diesel is the lifeblood of the food supply chain, fueling trucks and ships. Higher fuel costs for suppliers can mean price hikes in grocery aisles as the increased costs are passed down the supply chain.

Prices for tomatoes soared 32% in May compared to a year earlier, government data showed. Seafood prices jumped 6.5% over that period, while beef and veal prices climbed nearly 13%.

A persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation.

The latest price data spells m