WASHINGTON (dpa-AFX) – The consequences of the Iran war have further fueled inflation in the USA and pushed inflation above four percent for the first time in three years. In May, consumer prices rose 4.2 percent year-on-year, the Labor Department announced on Wednesday in Washington. Analysts on average had expected this. Inflation rose significantly for the second month in a row and rose further above the US Federal Reserve’s target of two percent. Economists assume that US inflation has reached its peak with the price jump.
Price developments in the largest economy continued to be driven primarily by energy costs, which became significantly more expensive as a result of the Iran war. In May, people had to pay 23.5 percent more for energy than a year ago. The rise in gasoline prices was particularly strong. Fuel has become more expensive by around 40 percent.
The core consumer price rate, which excludes volatile prices for energy and food, also increased. In this regard, the ministry reports a price increase of 2.9 percent year-on-year, after the annual rate was 2.8 percent the month before.
According to chief economist Thomas Gitzel from VP Bank, the increase in the core inflation rate was only marginal. This should lead to speculation about one Interest rate increase the Fed “won’t necessarily receive any new nourishment” in the current year.
On the foreign exchange market, the exchange rate of the euro hardly reacted to the price data in trading with the US dollar. The euro only rose slightly at times.
In addition, according to experts, inflation has probably reached its peak for the time being. “Since gas station prices have fallen so far in June, the annual inflation rate should already have reached its peak,” said analyst Dirk Chlench from Landesbank Baden-Württemberg. In his opinion, this could prompt the US Federal Reserve, despite a continued robust US labor market to refrain from raising key interest rates until further notice./jkr/jsl/men