Rise in gas prices from Iran war could have helped inflation hit a 3-year high
FILE-Customers fill up their vehicle gas tanks at the Sunoco gas station in Hauppauge, New York. (Photo by Steve Pfost/Newsday RM via Getty Images)
Soaring gas prices drove inflation to its highest level in three years in May.
Consumer prices increased 4.2% last month compared to 2025, up from 3.8% in April and the third consecutive spike. The Associated Press noted, citing the Department of Labor, that monthly prices jumped 0.5% in May, after substantial gains of 0.6% in April and 0.9% in March.
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High inflation has changed the conversation among Fed policymakers, who indicated earlier this year that they were considering cutting their key interest rate twice more in 2026.
Currently, more federal officials tell the AP that they expect the Federal Reserve’s next move will likely be a rate hike instead of a cut.
Gas prices in the U.S.
By the numbers:
In May, gas prices spiked because of Iran's closure of the Strait of Hormuz. Prices at the pump rose from roughly $4.04 in mid-April to $4.49 in mid-May, the Associated Press reported, citing the Energy Information Administration.
But gas prices have moved back to $4.16 on average nationwide, according to AAA, which may cause a cooler inflation reading in June. Currently, a gallon of gas has been above $4 a gallon since March.
Meanwhile, pricey diesel fuel has lifted shipping costs, with companies, including UPS and FedEx adding fuel surcharges in the past few months. This could also contribute to driving up grocery prices, which rose 0.7% in April and are 2.9% higher than in 2025.
The Department of Labor revealed in a report Wednesday that core prices rose at a more modest pace, which excludes food and energy categories. On a monthly basis, they climbed 0.2%, down from a 0.4% gain in April.
However, many goods and services spiked in price in May. For instance, clothing prices rose 0.3% and are 4.8% more expensive than in 2025.
Airline fares spiked 2.7% in May and are almost 27% higher than in 2025. Electricity prices jumped 0.6% in May and are up 5.9% in the past year.
Furthermore, some economists view tariffs boosting some costs, specifically clothing, which soared 0.6% in April and are 4.2% more expensive than in 2025. Expensive fuel may have also factored into higher airline prices in May, which would lift core inflation.
The Source: Information for this story was provided by The Associated Press, which references statistics from the Department of Labor. This story was reported from Washington, D.C.