US Inflation Rises to Three-Year High of 4.2%

U.S. consumer prices rose 4.2% in May from a year earlier, the fastest annual pace in more than three years, the Labor Department reported Wednesday. It marked the third straight monthly acceleration. The driver: gasoline prices, which have climbed since the U.S. and Israel launched military strikes on Iran.

Energy drove much of the increase, with gasoline among the largest contributors to the May jump. Economists had expected the 4.2% figure, according to a survey ahead of the report, but the trend complicates the Federal Reserve's calculus. Policymakers must now weigh war-driven energy costs against signs of slowing growth. Higher headline inflation also hits household budgets directly -- fuel, groceries, travel -- just as the summer driving season begins.