Trump Unbothered by Inflation Amid Iran War

Donald Trump expressed enthusiasm over rising inflation, saying “I love the inflation” after new data showed the rate climbed to an annual rate of 4.2% in May 2026, according to The Guardian. This marks the third consecutive monthly increase since the start of the Iran war and a three-year high.

Speaking from the White House on Wednesday, Trump said he was not concerned about the inflationary pressures due to recent developments in the conflict. “No, I love it. The numbers were great. ” he said, before adding that the US had been taking out “millions of barrels of oil” without Iran’s knowledge.

Trump claimed the US took out 22 ships “late at night, with no lights because they don’t have any radar,” a statement that has not been independently verified by The Guardian. “That’s why oil is at $85 a barrel,” he said.

Trump emphasized his control over the situation, saying that since the outset of the war, he understood the impact it would have on the economy. “Remember when I did this, I said … I hate to do this to you guys, but Iran is going to have a nuclear weapon very soon. We have to go in and attack,” he added.

Inflation Driven by Energy Prices

Data showed prices had increased sharply over the past several months, rising at an annual rate of 3.3% in March before going up to 3.8% in April. In February, before the conflict began, inflation was at 2.4%.

Energy prices were once again responsible for the increase in the consumer price index, according to new data from the Bureau of Labor Statistics, accounting for 60% of the overall monthly increases. The national average price for a gallon of gas is $4.15, according to AAA, which is slightly lower than where the price was a month ago but still $1 per gallon more than a year ago. Airline fares also increased 26.7% annually.

Other essential everyday expenses, such as food, energy services and clothing, also increased. Stripping out volatile energy and food prices, core CPI increased 2.9%.

Economic Outlook and Fed Pressure

The White House said in a statement the newest inflation figures were “at-expectation” and reinforce that “despite temporary disruptions as a result of Iran’s efforts to subvert the free flow of energy, President Trump’s broader economic agenda continues to deliver meaningful results for the American people.”

Kush Desai, a White House spokesperson, added in a statement that “Prices of prescription drugs, dairy products, cars, as well as both health and auto insurance continue to decline thanks to the Trump administration’s policymaking. The Administration will continue pushing our affordability agenda to enable Americans to keep more of their hard-earned money.”

Since the beginning of the US-Israel war with Iran, inflation has hit its highest levels since 2023, though they still remain well below the peaks recorded in 2022, when inflation hit 9%.

Higher prices have dampened Americans’ expectations of their financial outlook. According to a survey released on Monday from the Federal Reserve Bank of New York, households have become more pessimistic about inflation, the labor market, finding a job and the potential for layoffs. Consumer sentiment has also plummeted to a historic low, according to data from the University of Michigan, after falling for three consecutive months.

The new inflation data puts pressure on officials with the US Federal Reserve, who are meeting for the first time next week under the central bank’s new chair, Kevin Warsh. The Fed has voted to maintain interest rates since the end of last year. The central bank has been aiming for a target annualized inflation rate of 2%.

Warsh said he believed the rates, which stand at 3.5% to 3.75%, should be lowered, aligning himself with Donald Trump, who has spent the last year trying to coerce the central bank into lowering rates.

Even though prices are rising, the president is unlikely to be deterred from calling for rate cuts. On Tuesday, Trump told reporters that he didn’t think US fuel prices were “very high, relatively speaking.”

The Fed typically decreases rates to address high unemployment, at the risk of raising prices. The US job market has remained strong, with employers adding a surprising 172,000 jobs in May while the country’s unemployment rate held steady at 4.3%.

Goldman Sachs said on Friday that it no longer believed that the Fed would cut rates this year, instead predicting that the central bank would keep rates unchanged throughout 2026 and delay any cuts until next year.

JP Morgan Global Research forecast that rate hikes across global central banks were on the horizon and predicted that the Fed would increase rates by 2027. Bruce Kasman, chief global economist at JPMorgan Chase, wrote in the April report that recent developments were upending the debate about inflation inertia and the monetary policy path.

“The energy price spike is now raising inflation and generating a sharp squeeze on household purchasing power that could intensify if the Middle East conflict keeps the strait of Hormuz closed,” Kasman said.

Moody’s Analytics has estimated that the war and its resulting high energy prices have cost American households about $100 billion. The Bureau of Labor Statistics is scheduled to release May inflation estimates on Wednesday morning, which economists expect to show that inflation remained high.

The closely watched report will probably shape the outcome of the US Federal Reserve meeting scheduled for next week, where Kevin Warsh and the rest of the central bank’s board of governors will decide whether to change rates, amid elevated inflation and a relatively strong labor market.