&imwidth=800&imheight=600&format=webp&quality=medium "US inflation climbs to 4.2%, highest in three years: Here's why")
US inflation in May reached its highest level with the fastest rate in three years, surging to 4.2 per cent. The rise in prices in the US from 3.8 per cent a month earlier was largely due to an upsurge in energy costs, the Bureau of Labour Statistics (BLS) said. The inflation marked the third month in a row that the Consumer Price Index (CPI) rose, with households continuously feeling the strain of the US-Israeli war in Iran.
Rising inflation has increased expectations that the US Federal Reserve could raise interest rates to curtail consumer spending and ease price pressures. The last time inflation reached a higher level was in April 2023, when the US economy was grappling with the effects of the energy crisis triggered by Russia's invasion of Ukraine.
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What is the real cause of US inflation?
Energy costs have been a major contributor to the latest increase, with household gas and electricity bills in May standing nearly 25 per cent higher than a year ago. Petrol prices have accounted for a significant share of the rise. Data from the motoring group AAA showed that the average price of regular gasoline in the US currently stands at $4.15 per gallon, up sharply from $2.98 on February 28, when President Donald Trump launched strikes against Iran.
Following those attacks, Iran effectively shut down the strategically important Strait of Hormuz, a key shipping route that normally carries about one-fifth of the world's oil and gas supplies, pushing global energy prices higher.
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The US Bureau of Labour Statistics (BLS) also highlighted rising costs in sectors such as air travel, healthcare, recreation and communications. The Consumer Price Index (CPI) measures the change in prices compared with the same month a year earlier. The Federal Reserve's long-term inflation target remains 2 per cent.
