Rising gas prices pushed inflation to its highest level in three years last month, a headache for the Federal Reserve and a potential political challenge for the Trump administration as midterm elections near.
Consumer prices rose 4.2% in May from a year earlier, the Labor Department said Wednesday, up from 3.8% in April and the third straight increase. On a monthly basis, prices rose 0.5% last month, after big gains of 0.6% in April and 0.9% in March.
Outside of energy costs, price increases were not as dramatic, a sign that inflation hasn’t yet spread throughout the economy. Should the Iran war end and oil and gas prices decline, headline inflation could begin to cool. Gas prices have fallen this month.
One positive sign in Wednesday’s report: Excluding the volatile food and energy categories, core prices rose at a more modest pace. On a monthly basis, they climbed just 0.2%, down from a 0.4% gain in April. Compared with a year ago, they have risen 2.9%, up from 2.8% in April.
Still, many goods and services rose in price last month: Clothing prices increased 0.3% and are 4.8% more expensive than a year ago. Airline fares, pushed higher by pricier jet fuel, jumped 2.7% just in May and are nearly 27% higher than a year ago. Electricity prices rose 0.6% in May and are up 5.9% in the past year.
Inflation had been cooling before President Donald Trump imposed sweeping tariffs in April 2025, which lifted the costs of many goods. Prices have since surged after the Iran war made oil and gas more expensive, making affordability a key political issue.
Gas prices rose in May because of Iran’s closure of the Strait of Hormuz, which has choked off about one-fifth of the world’s oil supply. Prices at the pump rose, on average, from about $4.04 in mid-April to $4.49 in mid-May, according to the Energy Information Administration.
They have since fallen to $4.16 on average nationwide, according to AAA, which could lead to a cooler inflation reading in June. That doesn’t mean gas prices are not on the minds of most Americans. A gallon of gas has hovered above $4 a gallon since March.
The Associated Press has the full story.
