US Inflation Hits Highest Level in Three Years

SadaNews - US inflation reached its highest level in three years during May, driven by rising energy and fuel prices amid the repercussions of the war in the Middle East and tensions affecting global oil markets.

According to data released by the "U.S. Bureau of Labor Statistics" on Wednesday, the Consumer Price Index rose by 4.2% year-on-year in May, compared to 3.8% in April.

The data showed that energy prices surged by 23.5% compared to the same period last year, while gasoline prices increased by 40.5%, affecting transportation costs and the prices of several goods and services.

Food prices also rose for the second consecutive month, recording an annual increase of 2.7%, along with rising healthcare, personal care, airline ticket, and recreational activity costs.

The core inflation rate, which excludes food and energy prices, stood at 2.9% in May, compared to 2.8% in the previous month.

This increase comes amid ongoing disruptions in energy markets since the outbreak of the U.S.-Israeli war on Iran on February 28, which was followed by restrictions on shipping in the Strait of Hormuz, through which nearly one-fifth of the world's oil and gas supplies pass.

The rising cost of living is one of the main issues facing U.S. voters ahead of the midterm elections scheduled for November, as the Republican Party faces increasing pressure due to the impact of rising prices on American households.

Conversely, analysts believe that the pace of inflation may begin to decline in the coming months as energy prices stabilize.

Kathy Bostjancic, chief economist at Nationwide, stated that energy prices were the main driver behind the increase in inflation last month, adding: "We believe inflation has peaked and may decline in the second half of the year."

She noted that this scenario remains linked to the possibility of reaching understandings with Iran that would allow for the resumption of normal shipping through the Strait of Hormuz and alleviate pressures on global energy markets.

The U.S. Federal Reserve aims for a long-term inflation rate of 2%, and its monetary policy committee is scheduled to meet next week to discuss interest rates and assess the trajectory of the U.S. economy.