US inflation tops 4% for first time in three years as oil prices jump

By Alicia Wallace, CNN

(CNN) — Annual inflation rose to a three-year-high of 4.2% in May, underscoring how elevated energy prices are rippling through the US economy, according to new data from the Bureau of Labor Statistics.

Prices rose 0.5% on a monthly basis, driven higher by the US-Israeli war with Iran, the latest Consumer Price Index shows. The higher cost of energy accounted for 60% of the monthly increase.

Economists were expecting prices to rise 0.5% from the month before and for the annual rate to accelerate to 4.2% from the 3.8% reported in April, according to FactSet estimates.

May’s inflation data highlights the affordability concerns for Americans ahead of the midterms and puts fresh focus on President Donald Trump’s pledge to lower prices.

May’s release is also the first inflation report since Kevin Warsh was sworn in as the chair of the Federal Reserve, succeeding Jerome Powell. With inflation moving in the wrong direction and the labor market showing signs of resilience, economists expect the US central bank to keep rates unchanged — or even consider raising them.

Prices aren’t rising as sharply as they did in March and April; however, the past three months have seen the fastest pickup in price hikes since the April through June period of 2022, when inflation was climbing to a 41-year high.

That’s an unsettling throwback; however, economists say that this bout of inflation isn’t expected to be as bad as the last one – current projections have CPI topping out in the range of 4.5% to 5% this year.

This story is developing and will be updated.

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