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Annual inflation hit the highest level in more than three years last month as prices across the economy rose at an even quicker pace, according to data released Thursday by the Commerce Department.
Prices rose 4.1 percent over the past year and 0.7 percent in May alone, as measured by the personal consumption expenditures (PCE) price index. Without food and energy, prices were up 3.4 percent over the past year and 0.3 percent in May.
The annual inflation rate of 4.1 percent is the highest seen since April 2023, and it follows several months of steadily rising price growth driven by the war in Iran.
Inflation had already been stubbornly above the Federal Reserve’s preferred level of 2 percent before President Trump and Israel launched joint strikes on Iran in February. Iran’s closure of the Strait of Hormuz, one of the world’s busiest trade passages, caused prices for oil and other key commodities to spike for several months.
Trump and Iran announced a deal to end the conflict earlier this month, which reopened some maritime trade through the Strait of Hormuz and led to a notable decline in gas prices.
But months of rising energy and food costs have appeared to seep into other areas of the economy, deepening the affordability challenges faced by many U.S. households.
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