Inflation spikes to three-year high on rising fuel prices

The U.S. annual inflation rate jumped to 4.2 percent in May, according to the latest Bureau of Labor Statistics report, published yesterday. This is the highest official inflation rate since April 2023. Core inflation, which excludes volatile food and energy prices, rose slightly to 2.9 percent. This indicates that energy shortages, due primarily to Iran successfully blocking the Strait of Hormuz, are the main cause of the increase. U.S. gasoline prices have risen 30 to 44 percent year-over-year, with the national average at approximately $4.15 per gallon, and diesel is up about 50 percent to $5.21 per gallon. Commercial trucks transport virtually all goods—multiple times—consumed by Americans, including more than 70 percent of U.S. food and agricultural products. Fuel prices could surge even further in the coming months as inventories fall to critical lows.