{"id":2121,"date":"2026-06-10T12:35:28","date_gmt":"2026-06-10T12:35:28","guid":{"rendered":"https:\/\/denvermovingchronicle.com\/?p=2121"},"modified":"2026-06-10T12:35:28","modified_gmt":"2026-06-10T12:35:28","slug":"inflation-likely-reached-3-year-high-last-month-as-iran-war-spikes-gas-prices","status":"publish","type":"post","link":"https:\/\/denvermovingchronicle.com\/?p=2121","title":{"rendered":"Inflation likely reached 3-year high last month as Iran war spikes gas prices"},"content":{"rendered":"
\n

WASHINGTON<\/strong> | Consumer prices probably jumped in May for the third straight month, heightening concerns for the inflation fighters at the Federal Reserve and underscoring the threat that rising costs pose for the Trump administration as midterm elections near.<\/p>\n

Inflation is expected to reach 4.2% in May from a year earlier when the Labor Department reports last month\u2019s figures Wednesday, according to a survey of economists by data provider FactSet The annual increase would be up from the 3.8% reading in April. On a monthly basis, prices are forecast to have risen a hefty 0.5%, slightly below the 0.6% increase in April.<\/p>\n

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. The main question now is whether inflation will fade if the war ends and oil and gas prices fall, or will it persist even after the war.<\/p>\n

<\/div>\n

Some economists worry that prices are still elevated in areas that should be unaffected by gas costs, such as dental care, motor vehicle repair, and other services. At the same time, wages are rising only modestly, which should reduce pressure on firms to raise prices further.<\/p>\n

To that end, economists and financial markets will closely watch core prices, which exclude the volatile food and energy categories. Core inflation is forecast to have risen 0.3% in May from April, according to FactSet, a pace that is consistent with annual readings far higher than the Fed\u2019s 2% target. On an annual basis, core inflation may tick higher to 2.9% from 2.8%.<\/p>\n

Gas prices have fallen this month, but they rose in May because of Iran\u2019s closure of the Strait of Hormuz, which has choked off about a fifth of the world\u2019s 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.<\/p>\n

They have since fallen back to $4.16 on average nationwide, according to AAA, which could lead to a cooler inflation reading in June.<\/p>\n

More expensive diesel fuel has lifted shipping costs, with companies like UPS and FedEx adding fuel surcharges in the past couple of months. That is likely to push up grocery prices, which jumped 0.7% in April and are 2.9% higher than a year ago.<\/p>\n

Stubbornly high inflation has shifted the debate among Fed policymakers, who had signaled at the start of the year that they were inclined to cut their key rate twice more this year. Now, more officials are saying they expect the Fed\u2019s next move will likely be a hike rather than a cut. When the Fed boosts its key rate, it typically over time leads to higher borrowing costs for mortgages, auto loans, and business loans.<\/p>\n

Wall Street investors expect the Fed to raise rates in December, according to futures prices tracked by CME Fedwatch.<\/p>\n

Despite higher inflation, the job market appears to be improving, with hiring increasing to a healthy level in May, and the economy is still growing. These positive signs suggest the Fed doesn\u2019t need to cut rates to stimulate growth and hiring. They also signal that the Fed\u2019s rate isn\u2019t so high that it is weighing on the economy. Yet some officials want rates to cool growth a bit, because that can bring down inflation.<\/p>\n

Interest rates on two-year and 10-year Treasury securities have increased since Friday\u2019s jobs report showed hiring accelerated in May, a sign investors expect inflation may remain elevated and eventually require Fed rate hikes.<\/p>\n

Higher inflation has put the new Fed Chair, Kevin Warsh, in a difficult spot. He advocated for rate cuts last year and was chosen by Trump to replace Jerome Powell, after Trump relentlessly criticized Powell for not reducing rates more quickly. Yet for now, Trump and White House officials are mainly arguing that interest rates don\u2019t need to increase, rather than demanding further cuts.<\/p>\n

Some economists still see tariffs pushing up some costs, particularly clothing, which jumped 0.6% in April and are 4.2% more expensive than a year ago. Pricier fuel may have also led to higher airline fares last month, which would lift core inflation.<\/p>\n

Read more From tennis to T-ball, the White House\u2019s South Lawn is no stranger to sports. But not like the UFC<\/a><\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n

Read more Rob Reiner\u2019s son Nick seeks money from trust parents left him for his defense in their killings<\/a><\/p>\n<\/p>\n<\/p>\n<\/p>\n

Read more GO GLOBAL \u2014\u00a0Vacation across the planet for free on one Saturday afternoon in Aurora<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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