“You know what I really love? I love the inflation.” – Donald Trump, June 10
Rising gas prices pushed inflation to its highest level in three years in May, a headache for the Federal Reserve and a potential political challenge for the Trump administration as midterm elections near.
Consumer prices rose 4.2% in May from a year earlier, the Labor Department saidon June 10, up from 3.8% in April and the third straight monthly increase. On a monthly basis, prices rose 0.5% in May, after big gains of 0.6% in April and 0.9% in March.
Prices have now risen faster than wages for several months, pressuring many Americans’ finances and causing consumers to take a decidedly dim view of the economy. Families are dipping into savings to maintain their spending, and more people are falling behind on their credit card bills. Large retailers say they have also noticed changes in customer behavior, like buying smaller amounts of gas during visits to the pump.
Inflation is now well above the Federal Reserve’s 2% target, which it has surpassed for more than five years. With inflation proving stubborn, financial markets expect the Fed could raise rates by the end of the year. When the Fed lifts rates, over time it can make mortgages, auto loans, and business borrowing more expensive.
Outside energy costs, price increases in May were not as dramatic, a sign that sharply higher inflation hasn’t yet spread throughout the economy. Should the Iran war end and oil and gas prices decline, headline inflation could begin to cool. Gas prices have fallen in June, though they remain elevated.
Excluding the volatile food and energy categories, core prices rose at a more modest pace. On a monthly basis, they climbed just 0.2%, down from a 0.4% gain in April. Compared with a year ago, they have rise 2.9%, up from 2.8% in April.
Still, many goods and services rose in price in May: Clothing costs increased 0.3% and are 4.8% more expensive than a year ago. Airline fares, pushed higher by pricier jet fuel, jumped 2.7% just in May and are nearly 27% higher than a year ago. Electricity prices rose 0.6% in May and are up 5.9% in the past year.
Grocery prices were tamer in May compared with previous months, rising just 0.1% from April. Still, they are up 2.7% from a year ago and have risen sharply since the pandemic.
“I don’t think we’re anywhere near out of the woods yet,” Omair Sharif, chief economist at Inflation Insights, said. Price increases “were stronger under the hood.”
Sharif and other economists point out that the cost of services, including child care, home health care, and dental services are still rising much more quickly than is consistent with the Fed’s 2% inflation target.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, attributed some of the gain to a crackdown on immigration, which has likely forced many employers in those industries to raise wages.
Inflation had been cooling before President Donald Trump imposed sweeping tariffs in April 2025, which lifted the costs of many goods. Prices have since surged after the Iran war made oil and gas more expensive, making affordability a key political issue.
The political outrage over inflation has always been remarkably selective. During the Biden administration, Republicans and Conservative critics spent years blaming the White House for rising prices, often treating inflation as the defining measure of economic competence.
Russia’s invasion of Ukraine, global energy shocks, supply chain disruptions, and pandemic aftereffects were frequently dismissed as excuses. Their toxic argument was simple. Prices were high, therefore, the president was responsible.
Yet those same critics apply a double standard under Trump, excusing his economic failures and actively minimizing the financial suffering of Americans.
Inflation is running above 4%, gas prices remain elevated, consumer confidence has weakened, and Americans are once again being told to absorb higher costs. The difference is that the White House is now occupied by Trump. The loudest voices who demanded accountability have become uninterested in assigning blame.
The contradiction is difficult to ignore. Trump did not inherit an inflation crisis on the scale of 2022. Inflation had largely eased before his administration imposed sweeping tariffs that economists warned would increase costs throughout the economy. Those tariffs were a deliberate policy choice. Consumers, businesses, and importers are now paying the price.
Americans were told for years that presidents own the economy. If that was true under Biden, it remains true under Trump. Economic accountability cannot be a principle that applies only when the other party is in power.
Small businesses are struggling with higher costs, some of which they are passing on in the form of higher prices. Others have slowed hiring or even cut jobs.
Beth Benike, the founder of Oronoco, Minnesota-based Busy Baby, said her small company was hit hard by tariffs last year and is now struggling with higher shipping costs stemming from more expensive fuel. The company sells silicon placemats and toys that attach to high chairs and strollers.
Sales have declined as inflation has worsened, and Benike recently reduced one full-time employee to part-time hours. She said that more of her customers are now grandparents of newborns, rather than the parents.
“Grandparents have a little more disposable income than the generation that’s having babies,” she said.
Gas prices rose in May because of Iran’s closure of the Strait of Hormuz, which has choked off about a fifth of the world’s oil supply. Prices at the pump rose, on average, from about $4.04 in mid-April to $4.49 in mid-May, according to the Energy Information Administration.
They have since fallen back to $4.16 on average nationwide, according to AAA, which could lead to a cooler inflation reading in June. That doesn’t mean gas prices are not prominent in the minds of most Americans. A gallon of gas has hovered above $4 a gallon since March.
Major retail chains have discounted prices to accommodate customers who are watching their spending more closely.
Dollar General is expanding the number of items that cost $1 or less, including frozen food. The shift has come with shoppers swapping out favored retailers for dollar stores.
“When that (gas) price hits that $4 mark and then crosses it and then sustains for a while, you start to see that trade-in come in and you start to see that our core customer needs us most,” Dollar General CEO Todd Vasos said in June.
Amber Greenwell, executive director of the America First Credit Union’s charitable foundation, based in Ogden, Utah, says the cost of gas, housing and groceries have risen sharply in her state and much of the west in the past year. Her organization organizes food and diaper drives in the six states where the credit union operates.
“There is substantial growth in families who need more food resources as well as diaper resources,” she said.
Stubbornly high inflation has shifted the debate among Fed policymakers, who had signaled at the start of the year that they were inclined to cut their key rate twice more this year. Now, more officials are saying they expect the Fed’s next move will likely be a hike rather than a cut.
Despite higher inflation, the job market appears to be improving, with hiring increasing to a healthy level in May, and the economy is still growing. These positive signs suggest the Fed doesn’t need to cut rates to stimulate growth and hiring. They also signal that the Fed’s rate isn’t so high that it is weighing on the economy. Yet some officials want rates to cool growth a bit, because that can bring down inflation.
