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US President Donald Trump on Wednesday brushed aside concerns over surging consumer prices, declaring that he “loves the inflation” after fresh data showed inflation climbed to its highest level in more than three years, driven largely by rising energy costs linked to tensions with Iran.
Speaking to reporters at the White House, Trump was asked whether he was concerned about the latest inflation report, which showed the Consumer Price Index (CPI) rising 4.2 per cent year-on-year in May, up from 3.8 per cent in April and the fastest pace since April 2023. His response surprised many observers.
“No, I love it. I love the inflation,” Trump said, arguing that the rise in prices reflected developments in the oil market that he believes will ultimately benefit the United States.
The president went on to claim that the US has been quietly removing “millions of barrels” of oil linked to Iran, adding that Tehran was unaware of the operation until now.
“You know why? Because as soon as this war is over — do you know we've been taking out millions of barrels of oil? Nobody knows it. You know who doesn't know? Iran until right now,” Trump said.
The Labor Department reported that headline CPI inflation accelerated to 4.2 per cent in May, marking the third consecutive monthly increase. Energy prices accounted for a large share of the rise, with higher gasoline costs emerging as the main driver of inflation. Core inflation, which excludes food and energy, remained comparatively stable at 2.9 per cent.
The inflation surge comes as oil markets remain under pressure from geopolitical tensions involving Iran. Brent crude has remained elevated, while fuel prices have increased sharply, feeding into transportation and household costs across the US economy.
Trump argued that inflation would fall rapidly once the conflict ends and energy markets stabilise.
The latest inflation data complicates the outlook for the US Federal Reserve, which has been under pressure from the White House to lower interest rates.
While policymakers had hoped inflation was moving steadily toward the Fed's 2 per cent target, the latest jump raises the possibility that interest rates could remain higher for longer. Several economists and major financial institutions now expect the central bank to delay any rate cuts as it assesses whether the energy-driven price shock spreads more broadly across the economy.
Markets have already begun reassessing expectations for monetary easing, with investors growing less confident that the Fed will move aggressively to reduce borrowing costs in the near term.
The inflation rebound also presents a political challenge for Trump and Republicans ahead of this year's midterm elections.
Trump returned to office promising to lower prices and improve affordability for American households. However, inflation has now climbed above 4 per cent, while rising fuel costs have weighed on consumer sentiment and household budgets. Surveys show many Americans remain concerned about the cost of living despite a resilient labour market.
Critics argue that higher energy prices linked to the Iran conflict are eroding consumer purchasing power at a time when voters are already grappling with elevated housing, transportation and food costs. Supporters of the administration, however, contend that the inflation spike is largely temporary and tied to geopolitical developments rather than broader economic weakness.
For now, Trump's unusual embrace of higher inflation stands in stark contrast to the concerns of consumers, investors and Federal Reserve officials, all of whom are watching closely to see whether rising energy prices prove to be a short-term shock or the start of a more persistent inflationary cycle.
Speaking to reporters at the White House, Trump was asked whether he was concerned about the latest inflation report, which showed the Consumer Price Index (CPI) rising 4.2 per cent year-on-year in May, up from 3.8 per cent in April and the fastest pace since April 2023. His response surprised many observers.
“No, I love it. I love the inflation,” Trump said, arguing that the rise in prices reflected developments in the oil market that he believes will ultimately benefit the United States.
The president went on to claim that the US has been quietly removing “millions of barrels” of oil linked to Iran, adding that Tehran was unaware of the operation until now.
“You know why? Because as soon as this war is over — do you know we've been taking out millions of barrels of oil? Nobody knows it. You know who doesn't know? Iran until right now,” Trump said.
Inflation at highest level since 2023
The Labor Department reported that headline CPI inflation accelerated to 4.2 per cent in May, marking the third consecutive monthly increase. Energy prices accounted for a large share of the rise, with higher gasoline costs emerging as the main driver of inflation. Core inflation, which excludes food and energy, remained comparatively stable at 2.9 per cent.
The inflation surge comes as oil markets remain under pressure from geopolitical tensions involving Iran. Brent crude has remained elevated, while fuel prices have increased sharply, feeding into transportation and household costs across the US economy.
Trump argued that inflation would fall rapidly once the conflict ends and energy markets stabilise.
Fed faces fresh challenge
The latest inflation data complicates the outlook for the US Federal Reserve, which has been under pressure from the White House to lower interest rates.
While policymakers had hoped inflation was moving steadily toward the Fed's 2 per cent target, the latest jump raises the possibility that interest rates could remain higher for longer. Several economists and major financial institutions now expect the central bank to delay any rate cuts as it assesses whether the energy-driven price shock spreads more broadly across the economy.
Markets have already begun reassessing expectations for monetary easing, with investors growing less confident that the Fed will move aggressively to reduce borrowing costs in the near term.
Political risks ahead of midterms
The inflation rebound also presents a political challenge for Trump and Republicans ahead of this year's midterm elections.
Trump returned to office promising to lower prices and improve affordability for American households. However, inflation has now climbed above 4 per cent, while rising fuel costs have weighed on consumer sentiment and household budgets. Surveys show many Americans remain concerned about the cost of living despite a resilient labour market.
Critics argue that higher energy prices linked to the Iran conflict are eroding consumer purchasing power at a time when voters are already grappling with elevated housing, transportation and food costs. Supporters of the administration, however, contend that the inflation spike is largely temporary and tied to geopolitical developments rather than broader economic weakness.
For now, Trump's unusual embrace of higher inflation stands in stark contrast to the concerns of consumers, investors and Federal Reserve officials, all of whom are watching closely to see whether rising energy prices prove to be a short-term shock or the start of a more persistent inflationary cycle.
