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US President Donald Trump said he loves inflation on Wednesday. The comment came after new data showed US consumer prices rose 4.2 percent in May from one year earlier. This marked the fastest annual increase in more than three years. It was also the third straight month of accelerating inflation. Trump had previously dismissed affordability concerns as a hoax started by Democrats. He had also claimed he was lowering the cost of living.
Key inflation data:
- Consumer prices rose 4.2 percent in May compared with one year ago. This was up from 3.8 percent in April.
- Prices increased 0.5 percent from April to May. This followed a 0.6 percent gain in April and a 0.9 percent gain in March.
- Core inflation, which excludes food and energy, rose 0.2 percent in May. This was down from 0.4 percent in April. On an annual basis, core prices increased 2.9 percent.
- Inflation remains well above the Federal Reserve's 2 percent target.
Trump told reporters the numbers were great. He blamed the price jump on energy costs tied to the Iran war. Government data showed energy accounted for more than 60 percent of the monthly increase. He said inflation would fall once the conflict ends.
Trump said his administration had been taking millions of barrels of oil out every night through the Strait of Hormuz. He said the effort began last month and moved more than 100 million barrels through the strait. He said more than 200 commercial ships had traveled through the route safely. The strait had been shut since February 28 due to the conflict. Before the shutdown, roughly 20 million barrels moved through the route each day. The volume Trump mentioned equals about five days of normal shipments.
No data was available to verify those figures. It was also unclear what role the US military played in moving the oil.
Trump said the operation helped push crude prices below $90 per barrel. Oil prices had topped $110 in early April. On Wednesday, US crude futures rose about 4 percent to nearly $92 per barrel. The increase came amid new US airstrikes against Iran and retaliatory action by Tehran against countries in the region.
Other price changes in May:
- Clothing prices rose 0.3 percent and were 4.8 percent higher than one year ago.
- Airline fares jumped 2.7 percent and were nearly 27 percent higher than one year ago.
- Electricity prices increased 0.6 percent and rose 5.9 percent over the past 12 months.
- Food prices grew more slowly. Grocery costs edged up 0.1 percent from April but remained 2.7 percent higher than one year ago.
The White House noted some household costs fell in May. Prices for new vehicles, prescription medicines, and motor insurance all declined from the previous month.
Prices have been rising faster than wages for months. Americans have increasingly relied on savings to maintain spending. More people have fallen behind on credit card repayments. Retailers have observed customers buying smaller amounts of gas.
The Federal Reserve is set to hold its next policy meeting under new chair Kevin Warsh. The central bank is expected to keep interest rates unchanged. Markets now expect rates to rise before the end of the year due to high inflation.
Higher borrowing costs would lead to higher mortgage rates, more expensive car loans, and increased costs for businesses seeking credit.