Trump says he 'loves the inflation' as US prices rise at fastest rate in three years

President Donald Trump said he "loves the inflation" after US prices rose last month at their fastest rate in three years.

Bureau of Labor Statistics figures showed prices increased 4.2% in May from a year earlier, up from 3.8% in April. The rise was driven by higher energy costs following the US-Israel war in Iran.

"I love it. The numbers were great. You know what I really love? I love the inflation," Trump said at the White House.

He promised the rising prices would "come down like a rock" once the war with Iran ended. Later that day, the US military bombed Iran.

Reacting to the figures on Wednesday, Trump said US forces had conducted nighttime operations to take "millions of barrels" of oil from Iran, which he said had contributed to a slight drop in oil prices.

"When this conflict is over… you will see oil drop to where it was before," he told reporters.

The president pointed to a trip to Iowa in early 2026, when he saw petrol selling for $1.85 per gallon, and said "we will be back at those levels very soon."

The global benchmark for oil, Brent crude, is still trading significantly higher than pre-war levels.

Trump told the New York Post later that his remarks were taken out of context and that he meant inflation is "much lower than anticipated," despite the Iran war.

Wednesday marked the third straight month the US Consumer Price Index has risen, with households feeling the strain of the US and Israel's war in Iran.

Trump has said inflation is heating up only temporarily and expects it to cool rapidly once the war ends.

Inflation remains far below the 9.1% peak under his predecessor Joe Biden in mid-2022.

Still, it poses a political problem for Trump, given that voters have ranked the economy as a top concern ahead of November's midterm elections.

Higher inflation raises the likelihood that the US Federal Reserve will raise interest rates to curtail spending.

Overall energy bills including gas and electricity were almost a quarter higher in May than a year earlier, with petrol responsible for much of the increase.

Separate figures from the AAA motoring group showed the average price of a gallon of regular petrol in the US is currently $4.15, up sharply from $2.98 on February 28, when Trump launched strikes on Iran.

In response to the strikes, Iran has effectively shut the Strait of Hormuz waterway, which normally ships about a fifth of the world's oil and gas, choking supply.

On Wednesday night, the US military said it had launched strikes on Iran for the second time in as many days.

Both sides have been exchanging fire this week despite a ceasefire that took effect in April. The conflict began more than three months ago.

The BLS figures also showed rising costs for plane tickets, personal and medical care, recreation and communication.

The CPI measures how much prices have risen in a given month compared with the same month a year earlier. The Fed's long-term inflation target is 2%.

Economists have warned that even with a swift end to the Iran war, it could take until 2027 for normal flows of goods through the Strait of Hormuz to be restored.

Trump, a Republican, promised in his 2024 campaign that cutting inflation would be central to his agenda.

His remark on Wednesday appearing to embrace rising prices drew criticism from opponents. Senate Democratic Leader Chuck Schumer posted on X that "his contempt for you knows no bounds."

Trump was also criticised last month for saying he was "not even a little bit" influenced by Americans' financial situation when it came to ensuring Iran did not develop nuclear weapons.

Higher inflation also poses a challenge for Kevin Warsh, the new governor of the Fed, ahead of his first interest rate decision next week.

When inflation is significantly above the Fed's target, the central bank's board of governors typically moves to raise interest rates. This pushes up borrowing costs and restricts the flow of money in the economy, limiting further price hikes.

Isaac Stell, investment manager at Wealth Club, said an interest rate hike is "the most logical conclusion from today's data combined with last week's healthy jobs numbers."