Rising gas prices pushed inflation to its highest level in three years last month, a headache for the Federal Reserve and a potential political challenge for the Trump administration as midterm elections near.
What We Know: Consumer prices rose 4.2% in May from a year earlier, the Labor Department said Wednesday, up from 3.8% in April and the third straight monthly increase.
What It Means: Prices have now risen faster than wages for several months, pressuring many Americans’ finances and causing consumers to take a decidedly dim view of the economy.
When the Fed lifts rates, over time it can make mortgages, auto loans, and business borrowing more expensive.
Compared with a year ago, they have rise 2.9%, up from 2.8% in April
Prices at the pump rose, on average, from about $4.04 in mid-April to $4.49 in mid-May, according to the Energy Information Administration.
Higher inflation has put Fed Chair Warsh in a difficult spot.
President Trump and White House officials are mainly arguing that interest rates don’t need to increase, rather than demanding further cuts.
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