US consumer inflation at three-year high in May amid continued West Asia tensions
US inflation has accelerated for the third consecutive month in May as Washington DC continues its efforts to reach a ceasefire in the war in
US inflation has accelerated for the third consecutive month in May as Washington DC continues its efforts to reach a ceasefire in the war in West Asia. This was the highest reading since April 2023, as per official data, but is in line with analysts' expectations. The Consumer Price Index rose 4.2 per cent in May year-over-year, as per data from the Bureau of Labor Statistics, New York Times reported. This is an increase from the 2.4 per cent annual rise that the US saw before the West Asia conflict began on 28 February this year. Over the month of May prices rose 0.5 per cent overall. The May CPI was also up from the Aril figure of 3.8 Energy prices soar amid West Asia war The US-Israel war against Iran, which has been going on since 28 February, has sent prices of energy soaring once Tehran decided to virtually close the Strait of Hormuz, through which around 20 per cent of the world's oil and gas pass.
Donald Trump, the US president, has insisted that the price rise is temporary and a peace deal will be soon signed between the warring nations. However, the soaring inflation might play a factor in the upcoming midterm elections in the US in November. While the Republican Party will try to keep its control over both houses of Congress, the high prices might prove to be a thorn on its way. Energy prices in the US have risen 23.5 per cent compared to the same time period last year. Gasoline prices have risen 40.5 per cent in the same time frame. Prices of grocery have also risen in the US for the second month in a row, and are up 2.7 per cent over a year ago.
Inflation has been battering Americans since the COVID pandemic, and prices increases have continued to remain high since then. Even if the conflict is resolved soon, economists are seeing more price increases for the US on the horizon, which could make the Federal Reserve to consider increasing interest rates this year, as per Bloomberg. S&P 500 futures also pared losses after the inflation data release. Core consumer price index (CPI) inflation, which excludes volatile food and energy prices, came in at 2.9 percent in May, up from 2.8 percent the month before. The US Federal Reserve has a long-term two-percent target for inflation, and the central bank's rate-setting committee will meet next week to set interest rates.
Markets expect them to keep rates steady at this meeting, but are now pricing in rate hikes for later in the year, spooking equity investors.
The BriefWire