Americans feel financial pinch of Iran war

Added: 2026-05-19

[00:00:00]Hi, and thank you for joining us. The new inflation report shows the war with Iran is taking a toll on Americans' finances, but President Trump today said that's not a priority when making decisions about the conflict. The only thing that matters when I'm talking about Iran, they can't have a nuclear weapon. I don't think about American financial situation. I don't think about anybody. I think about one thing. You cannot let Iran have a nuclear weapon. That's all. That's the That's the only thing we do.

[00:00:29]The Bureau of Labor Statistics says the yearly inflation rate hit 3.8% in April.

[00:00:33]That's the highest level since May of 2023. Core inflation, which excludes food and energy prices, has risen nearly 3% since last year, indicating that cost increases are extending beyond fuel. The blockade in the Strait of Hormuz has sent gas and oil prices soaring with energy costs accounting for 40% of the total CPI increase. The average price for a gallon of gas in the US today is $4.50 according to AAA. That's up more than 50% since the start of the war. The inflation spike will also likely have an effect on the Federal Reserve's next interest rate decision in June. Rates have held steady since January. For more, let's bring in CBS News business contributor and financial journalist Javier David. So, Javier, we know fuel prices are weighing on Americans' wallets, but where else are people feeling the pinch?

[00:01:22]Yeah, look, suffice to say this was a really ugly report. It helps explain why we have consumer sentiment that's been largely record lows. Um, inflation The thanks to inflation, everyday expenses are becoming the sort of raging inferno that's scorching consumers on multiple fronts, and they're extremely unhappy about it. So, we braced ourselves for an energy-related price shock stemming from Hormuz shutdown, and there certainly was that in this data, but it also clearly reflects all of our inflationary uh the inflationary struggles are just kind of going beyond energy and just getting palpably worse. So, food costs up 3.2% annualized, soaring meat and potato prices, and tomato rather. Um, brace yourself for a really expensive picnic this summer. Shelter costs, we talk all the time about how expensive housing and rents are. Those jumped by 0.6% month over month. To be fair, there was a little bit of noise in this segment in part because of last year's government shutdown, um, but there's no relief in sight, basically, for how expensive it is to buy a place or even rent one, and it's a major part of consumers monthly budgets. And electricity, in terms of kilowatt hours, that's soaring. That's kind of poisoning this whole debate that we're having over uh, uh, data centers that are all set to come online um, as this AI boom takes shape. So, you know, and also, even the worst part about this is inflation is steadily outpacing the growth in wages, which makes it really hard for workers to stay afloat on everyday expenses. So, there's little wonder why this K to 12 poll that was released today uh, showed President Trump's net approval on inflation is now even lower than former President Biden's lowest rate. And so, I have to be quick with you on this, but does this mean that the Fed is possibly going to start raising rates again?

[00:02:59]Yeah, I mean, the Fed is kind of stuck like Chuck, honestly. You know, whether you're talking about Fed's Chuck Powell or Warsh, these numbers mean that their hands are really tied. They started an easing signal that was arguably premature. It ratcheted up expectations for even more cuts, but now they have really no runway to ease more because inflation is running hotter than it has been in a few years. Hasn't really hurt the markets, but they're really stuck in neutral at this time where the labor market is kind of crying out for cut and stagnant, but all of these price pressures suggest that um, they should arguably be teeing up for rate cycle, and that is becoming a big part of the debate. And at a minimum, they're not going to cut rates anymore this year, probably. All right, Javier de Benito, thank you. CBS News White House reporter Olivia Ronald joins us now. How's the White House reacting?

[00:03:43]Well, we heard from President Trump on his way to that uh, statement that he's doing in China, where he was asked about those inflation numbers, namely the fact that the president ran on bringing down inflation and high prices. The president reacted saying that inflation was largely at 1.7% but he had a choice of whether to let Iran have a nuclear weapon and said he made the decision to go forth with the war in Iran in an effort to have them not have a nuclear weapon and conceded that that's part of the reason why we're starting to see these high prices. As Javier just laid out there, the president also said at one point that he did not think about Americans financial situations when he is making the decisions when it comes to Iran. He said, quote, "Not even a little bit." When asked if he thinks about it, he said, "The only thing that matters when I'm talking about Iran, they can't have a nuclear weapon. I don't think about Americans financial situations. I don't think about anybody." So, Lindsey, I think that's the quote that you're going to hear a lot before the midterms this year.

[00:04:41]All right, here's also what the president said about the Chinese leader before leaving.

[00:04:46]He's been a a friend of mine. He's been somebody that we get along with.

[00:04:51]And I think you're going to see that good things are going to happen. This is going to be a very exciting trip. Do you think he needs to intervene at all with the Iranian? Do you think he can help in any way? No, I don't think we need any help with Iran. We'll win it one way or the other.

[00:05:05]What is topping the agenda for this trip?

[00:05:08]Well, certainly the hope was going to be some renewed economic deal between the US and China, perhaps some deal on AI.

[00:05:14]We know there are a lot of CEOs hanging heading out there with the president.

[00:05:18]But hanging over all of this is the war in Iran, which is certainly remaining a sticking point not only for the US but for China, which gets a large majority of its oil, its energy or gets a good bit of its energy from Iran. Certainly the region also gets a lot of its energy through the Strait of Hormuz. So, this continues to be something really a thorn in the president's side as he heads to China. It's going to be something they'll certainly talk about, perhaps even discuss whether there is potential that China could help in resolving the war, although President Trump on his way out today said he's not going to ask Xi Jinping for anything, but this will certainly be top of mind.

[00:05:57]I love you, Arnauld. Thank you.