Inflation passes 4% for first time in three years

Driven in large part by energy price increases, U.S. inflation jumped to 4.2% in May, up from April’s 3.8% rate and the highest level in three years.

The U.S. Labor Department’s Consumer Price Index Summary released Wednesday finds May’s headline inflation breached the 4% mark for the first time since April 2023 but core inflation, which strips out volatile food and energy prices, registered much lower last month at a 2.9% annual reading.

Mountain West states, which include Utah, saw regional annual inflation in May tracking well below the national average at 3.5%.

Overall energy prices were up 23% in May, accounting for 60% of the month’s inflation increase, with gasoline costs ringing in 40.5% higher than the same time last year, according to the report. The average price of a gallon of regular across the U.S. was $4.13 on Thursday, per AAA tracking, down from $4.52 a month ago but still $1 per gallon higher over the past 12 months. Utah drivers are currently spending considerably more on fill-ups with a gallon of regular going for a statewide average of $4.37. That price represents some relief from the $4.48 average of a month ago but is $1.06 more than last year.

Overall food costs rose 3.1% on a 12 month basis in May, with groceries up 2.7% and restaurant bills 3.5% higher than last year. Housing-related costs were up 0.3% on a monthly basis in May and 3.4% more costly than a year ago.

Some economists predict elevated energy costs, driven in large part by the ongoing Iran war, will continue to impact prices on a broad array of consumer goods and services, even if a near-term resolution is reached.

“Americans are getting squeezed financially by inflation that’s back at a three-year high,” Heather Long, chief economist at Navy Federal Credit Union, told CNBC. “The frustration for many Americans is that so many of the basics are up in price right now – gas, food, electricity, and medical care are all clear pain points that are above 3% inflation. Ending the war in Iran will help to moderate inflation, but the worst is likely still to come for rising food prices.”

What Trump says about inflation

Shortly after the Labor Department reported that inflation had surpassed for the first time since early 2023, President Donald Trump told reporters, “I love it, the numbers were great,” adding that oil prices didn’t climb as high as he thought they might when he ordered attacks on Iran in late February, per Politico.

“I love the inflation,” he said. “You know why? Because as soon as this war is over, … it’s going to come down like a rock.”

Jarrod Agen, executive director of the White House’s National Energy Dominance Council, said at POLITICO’s Energy Summit that the president is “not panicking” when it comes to getting prices down.

Longtime Trump advisor and a senior counselor on trade policy Peter Navarro published an op-ed Wednesday noting that the latest surge in consumer prices looks much more benign if you ignore the spike in energy costs and that “the underlying inflation trend remains contained.”

Consumers weary of Iran war economic impacts

Recent polling by the Deseret News in partnership with the University of Utah’s Hinckley Institute of Politics found households in Utah and across the country united in their concern over how economic fallout from the Iran war is challenging their financial well-being and ratcheting up anxieties.

The survey revealed a striking level of worry among respondents in both the statewide and national samples, with 80% of Utah participants and 79% of national respondents saying that they’re at least somewhat concerned about the war’s impacts on the U.S. economy, with 51% and 50%, respectively, saying they are very concerned. Just 18% of Utah poll participants and 15% of national respondents said they were not too concerned or not at all concerned about the impacts.

Overall concern about how the war in Iran is affecting household budgets was similarly widespread, with 87% of Utah respondents and 79% of national participants saying the cost of daily goods has increased somewhat or a great deal. Only 3% and 7%, respectively, report they are paying prices that are somewhat or a great deal lower since the war began.