Soaring gasoline prices, triggered by the U.S. war with Iran, have pushed inflation to its highest level in more than three years.
A report from the Labor Department on Wednesday showed consumer prices in May were up 4.2% from a year ago. That's the biggest annual increase since April of 2023. By contrast, the Labor Department says average wages have risen only 3.4% over the last year, so workers' real spending power has declined.
Prices rose 0.5% between April and May, with higher energy costs accounting for more than 60% of that monthly increase. Gas prices have jumped by well over a dollar a gallon since the war began, strangling shipping traffic in the Strait of Hormuz — a critical pathway for much of the world's oil supply.
Higher fuel costs also pushed up airfares in May. Airline tickets cost about 27% more than they did a year ago.