May CPI Rises 4.2% Amid Energy Shock... Trump Claims "Hormuz Operation Prevented Surge" (Comprehensive)

May CPI Records Highest Increase in Three Years
Energy Prices Surge Amid Iran War Aftermath
Core CPI Falls Short of Expectations, Inflation Spread Contained
Real Average Hourly Wage Down 0.7% Year-on-Year

The U.S. consumer price inflation rate has soared to its highest level in three years, surpassing 4%. The aftermath of the war in Iran has led to a sharp increase in energy prices, pushing inflation higher. U.S. President Donald Trump, despite the rise in prices, claimed, "When the war ends, inflation will drop like a rock," and argued that a secret U.S. military operation in the Strait of Hormuz prevented even greater surges in oil prices.

Groceries are displayed at a supermarket in New York, USA, as the U.S. Consumer Price Index (CPI) inflation rate for May hits its highest in three years. New York, USA - Photo by Yoonjoo Hwang

The U.S. Department of Labor announced on the 10th (local time) that the Consumer Price Index (CPI) for May rose 4.2% year-on-year. This marks the highest increase in three years and one month. On a month-on-month basis, CPI increased by 0.5%.

The core CPI rose by 2.9% year-on-year and 0.2% month-on-month. The monthly increase was below the market expectation of 0.3% and significantly slower than the 0.4% increase in April. Bloomberg assessed that this did not lead to widespread secondary inflation.

This round of inflation was essentially driven by energy prices. Energy prices rose 3.9% month-on-month, accounting for 60% of the monthly index increase. In particular, gasoline prices jumped 7.0% from the previous month and have surged by nearly 50% cumulatively since the outbreak of the war.

Airfares increased by 2.7%, and delivery service fees rose for the third consecutive month. Communication costs were up 1.3%, and medical services increased by 0.3%. Food prices climbed 0.2% month-on-month, with grocery prices up 0.1% and dining-out prices rising 0.3%.

The real average hourly wage decreased by 0.7% compared to the same period last year, marking the largest decline in over three years. U.S. Department of Labor website

As wage growth fails to keep pace with inflation, household burdens are increasing. According to data released that day, the real average hourly wage decreased by 0.7% compared to the same period last year, marking the largest decline in over three years.

President Trump, speaking with reporters at the White House, said, "I love the inflation," and insisted, "Prices will plummet when the war ends."

He also revealed via his social networking service (SNS) Truth Social that since last month, the U.S. military has been conducting secret operations in the Strait of Hormuz to ensure the safe passage of civilian vessels. He claimed, "More than 200 merchant ships have safely passed, and over 100 million barrels of oil have been supplied to the market," adding, "As a result, oil prices remain at 85 to 90 dollars per barrel instead of 250 dollars."

However, the market is concerned that a prolonged war in the Middle East could further intensify inflationary pressures. Gregory Daco, Chief Economist at EY-Parthenon, predicted, "The longer the conflict lasts, the more widespread and persistent inflationary pressures will become."

The Federal Reserve is expected to keep the benchmark interest rate unchanged at the Federal Open Market Committee (FOMC) meeting scheduled for next week. However, the futures market is reflecting the possibility of additional rate hikes by the end of the year due to concerns over reaccelerating inflation.

This content was produced with the assistance of AI translation services.