By Daily Mail (U.S.) | Created at 2026-06-10 15:06:23 | Updated at 2026-06-14 22:34:27
4 days ago
Stubborn inflation is getting worse in the US even as prices in the global oil market cool off - and the knock-on effects of the chaos in the Middle East are spreading throughout the US economy.
The Bureau of Labor Statistics (BLS) reported that consumer prices jumped by 0.5 percent in May, pushing the annual CPI inflation rate up to 4.2 percent for the month, its highest level in nearly three years - and a big jump from the 3.8 percent figure in April.
The last time annual inflation hit these highs was April 2023, when annual CPI hit 4.9 percent - but it had been below the key 4 percent threshold for the last three years.
The fragile ceasefire in the Middle East has helped pull oil prices lower in recent weeks, however the shock from three months of dramatically elevated gasoline prices has driven prices higher for everything from toilet paper to tomatoes.
The national average gasoline price topped out at $4.56 a gallon in mid-May - a four-year high - and it has fallen in the weeks since to around $4.15, as the fragile Iran war ceasefire led to lower global oil prices.
'Inflation is back above 4 percent for the first time in three years, driven by the Middle East oil shock - and that means filling up your car keeps getting more expensive,' Nic Puckrin, markets expert and former Goldman Sachs analyst, told the Daily Mail.
While a dip in gasoline prices offers highly visible relief at the pump, that doesn't automatically mean inflation will follow suit.
In fact, economists say that sticky, higher inflation might be here for a while - that’s when consumers and companies get used to rising prices, which tends to keep them rising.
The price of gasoline at a gas station in Encinitas, California, at the very beginning of May
Consumers are worried about continued price gains spilling over from energy to everyday staples
Nic Puckrin, markets expert and former Goldman Sachs analyst
American consumers are reeling as the annual inflation has surged almost 80 percent since January, when CPI sat at a much lower rate of 2.4 percent.
The energy shock from the closure of the Strait of Hormuz has decimated global supply chains, raising the cost of everything from filling up the tank to booking a flight.
The May data included a 3.9 percent surge in energy costs month over month, bringing the annual increase in energy costs to a staggering 23.5 percent.
When you remove volatile food and energy prices from the data - so-called 'core CPI' - prices gained 0.2 percent for the month, and a still-hot 2.9 percent jump year over year.
All eyes are now fixed on the Federal Reserve as officials prepare to meet on June 17 to decide the future of interest rates. Investors are desperate for clues on whether the central bank will finally acknowledge the gravity of this inflation surge.
'This data is so important because the Fed’s next meeting is coming up next week, and the rising prices should kill any chance of a rate cut,' Puckrin told us.
He believes that to stop things from getting out of hand, the Fed may have to raise rates soon - something consumers should prepare for when making financial decisions this year.
