Home / Inflation Hits a Three-Year High Driven by Energy Costs

Inflation Hits a Three-Year High Driven by Energy Costs

By: Jasmin Espinas

Updated: June 10, 2026

Published: June 10, 2026

Advertising Disclosure

The content featured in this article may include sponsored placements or affiliate partnerships. These do not reflect the views or recommendations of Financial Daily Update.

We do not guarantee the accuracy or reliability of information presented by third-party contributors or advertisers. You are encouraged to verify all product claims and service terms directly with the provider.

Some of the links on this page may lead to financial partners. If you take action through those links—such as applying for a loan or signing up for a service—we may earn compensation.

That said, all editorial content is written independently and without bias, in line with our mission to provide transparent and informative financial reporting.

US consumer inflation hit a three-year high in May 2026. The Consumer Price Index (CPI) rose 4.2% over the past year.

This marks the largest annual gain since April 2023. Surging energy costs are the main driver of this increase. The ongoing Middle East conflict heavily influenced these price hikes.

Energy Prices Fuel the Inflation Increase

Energy prices accounted for over 60% of the monthly rise. The energy index jumped 3.9% from April to May.

Over the past year, energy prices vaulted by 23.5%. Gasoline costs alone accelerated 7.0% in just one month. The war with Iran continues to push these costs higher.

Wage and Core Inflation Struggles

Core inflation, excluding food and energy, rose 2.9% yearly. Core prices saw a modest 0.2% monthly increase.

Auto insurance prices actually fell by 1.7% in May. However, food costs and rent continued to climb.

Workers are feeling the pain of these rising costs. Real average hourly earnings fell 0.1% during the month. As such, inflation has outpaced wage growth for two consecutive months.

Political and Economic Impact

This soaring cost of living creates major political challenges. President Donald Trump faces mounting frustration over the economy.

The Federal Reserve is also monitoring this inflation data closely. Experts expect the Fed to keep interest rates unchanged. The current benchmark rate sits between 3.50% and 3.75%.