War with Iran pushes US inflation to highest level in nearly three years

Inflation in the United States surged to 4.2% year-on-year in May, reaching its highest point in almost three years, largely due to the ongoing conflict with Iran. The increase in energy costs, particularly gasoline, significantly impacted consumer prices.

Official data released shows that energy prices climbed 23.5% compared to the same period last year, with gasoline prices alone jumping 40.5%. Food prices also experienced a notable increase for the second consecutive month, rising by 2.7%. The underlying inflation rate, which excludes volatile energy and food components, edged up to 2.9% in May from 2.8% in April.

The conflict with Iran, initiated in February, has disrupted global energy markets. Iran's blockade of the Strait of Hormuz, a critical chokepoint for global oil transit, has been a major factor contributing to the price hikes. This disruption affects approximately 20% of the world's oil supply.

In early 2026, inflation in the U.S. had remained relatively stable, hovering around 2.4% in January and February. However, the war's impact has shifted this trend. Reports indicate that average wages in May increased by 3.4% year-on-year, falling short of the inflation rate.

With legislative elections approaching in November, the Trump administration maintains that the economic effects of the war will be temporary. However, the rising inflation poses a significant challenge to the government's economic narrative.