Lates News

The impact of the Iran war on energy prices has once again accelerated inflation in the United States in May, but a key measure of underlying inflation increased less than expected. Data released by the US Bureau of Labor Statistics on Wednesday showed that overall CPI rose 4.2% year-on-year in May, the largest increase since early 2023. Excluding food and energy, core CPI increased 0.2% month-on-month, lower than the expected 0.3%; and rose 2.9% year-on-year. Despite the significant increase in overall CPI driven by energy, the report details a more moderate picture: transportation services, health insurance, and new car prices all saw declines. This is little comfort to consumers - economists expect future prices to continue to rise, which may keep the option of interest rate hikes on the discussion agenda for Fed officials this year. Even if the conflict quickly subsides and oil production returns to normal, cost pressures are unlikely to ease. In addition to the initial impact on energy prices, disruptions in the fertilizer market may eventually push up prices for groceries, while rising transportation costs will also drive up prices for various consumer goods.