on Wednesday dismissed concerns over a sharp rise in consumer inflation, which climbed to its highest level in three years in May, driven largely by soaring energy costs linked to the ongoing conflict with Iran, AFP reported.
“The numbers were great… I love the inflation,” Trump told reporters, a comment pounced on by Democrats who have made rising prices a cornerstone of their campaign to take control of Congress in November’s midterm elections.
The Consumer Price Index (CPI) increased by 4.2% year-on-year in May, up from 3.8% in April and marking its highest level since April 2023, AFP reported.
Republican House Speaker Mike Johnson later contended that Trump’s comments had been misconstrued, while Senate Democratic Minority Leader Chuck Schumer argued that the remarks reflected a lack of concern for the economic challenges facing American households.
“Trump really said, ‘I love the inflation.’ On camera. For all of America to hear. His contempt for you knows no bounds,” Schumer posted on X.
And the Democratic Party posted a new campaign ad on its social media account featuring a video of Trump’s comments.
“Trump said the quiet part out loud — he loves inflation. Every American should see this,” the post said.
The US-Israel war against , launched in late February, has sent energy prices skyrocketing after Tehran retaliated by virtually closing the vital Strait of Hormuz, through which roughly a fifth of global oil and gas normally pass.
Trump also repeated his prediction that inflation would “come down like a rock” after the conflict ends.
Economists have disputed that claim, with oil prices expected to take months to return to pre-war levels, depending on when hostilities end.
Possible peak
May’s inflation report showed that energy prices surged 23.5% compared with a year earlier, with gasoline prices jumping 40.5% over the same period. Food costs also continued to climb, with grocery prices rising 2.7% year-on-year for the second consecutive month of notable increases, AFP reported.
Other categories that recorded monthly price gains included healthcare, personal care products and services, air travel, and recreational activities.
American consumers have faced persistent cost-of-living pressures in recent years, as inflation has remained above pre-pandemic levels long after the COVID-19 crisis subsided.
Prices have been fuelled by repeated shocks, including the Russian invasion of Ukraine, Trump’s tariffs and now the war on Iran.
Analysts, however, said that gasoline prices at the pump have recently stabilized, potentially indicating a favorable outlook for overall inflation.
“Higher energy prices again pushed up inflation last month, but we estimate that inflation has peaked and will trend lower in the second half of the year,” said Kathy Bostjancic, chief economist at Nationwide.
She added that this was assuming there was a “near-term resolution with Iran to reopen the Strait of Hormuz.”
Core CPI inflation, which excludes volatile food and energy prices, came in at 2.9 percent in May, up from 2.8 percent the month before.
“For now, there appears to be little passthrough of higher energy cost onto core inflation, outside of airfare,” said Gregory Daco, chief economist at EY-Parthenon, AFP reported.
‘No position to cut rates’
The U.S. Federal Reserve maintains a long-term inflation target of 2%, and its rate-setting committee is scheduled to meet next week to assess the economic outlook.
The meeting will be the first under new Fed Chair Kevin Warsh, who assumed office last month and is expected to face pressure from President Donald Trump to lower interest rates.
Despite that, financial markets broadly anticipate that the Fed will leave rates unchanged at this meeting. Investors are increasingly pricing in the possibility of rate increases later this year, a prospect that has unsettled equity markets and weighed on investor sentiment.
Before the war, markets had priced in rate cuts for later in the year, with expectations that inflation fueled by Trump’s tariff policy would begin to fade.
The war, however, has complicated the outlook, with more Fed policymakers saying they were concerned about rising inflation, which the central bank would typically address by raising rates.
“The Fed will be in no position to cut rates if this continues,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
(With inputs from AFP)
