On Wednesday, it was announced that inflation has accelerated for the third straight month, exploding to 4.2 percent annually, nearly double the annual increase before President Donald Trump launched war with Iran. The fastest increase pace since 2023, rising energy prices were the main reason for the growth. That’s already bad news, but according to several leading economists, the situation is going to get worse as “the inflation genie is out of the bottle.”
“So far, over the first five months of 2026, the CPI is up 2.52 percent,” posted Europac Chief Economist Peter Schiff. “If this pace continues for all of 2026, the CPI will rise 6.2 percent, the most since 2022. But I think the second half of the year will see a much bigger rise, sending the full year above 7 percent, the highest rate since 1981.”
Schiff was referring to the 1981 recession that was driven by stagflation. The most severe recession between WWII and the 2008 crisis, it resulted in a global economic catastrophe that was felt for years. And Schiff is far from the only economist to express concerns that the problem is just beginning.
“On a three-month annualized basis inflation is up 8.2 percent and is up 5.6 percent on a 6-month annualized pace,” noted Wall Street Journal economic forecast panelist Joseph Brusuelas. In other words, the numbers show that the bulk of the inflationary increase came over the past three months, resulting in energy prices rising by 23.5 percent, energy commodities by 40.6 percent, and gasoline prices by 40.6 percent over the course of one year. “That is probably the best summation of a war-induced supply shock, a rising price level and why we think that we have not yet experienced a complete passing through of the price shock downstream.”
That means that the war is not only causing inflation but that its “downstream” effects are yet to be felt. Translation: things are going to get worse. And that’s not all.
“Inflation is so high that it's erasing all wage gains,” Navy Federal Chief Economist Heather Long pointed out. “Inflation: 4.2 percent in May for the past year. Wage growth: 3.4 percent in May for the past year. Americans are getting squeezed financially. This isn't just ‘bad vibes’ about the economy. There is real pain, especially for middle-class and lower-income households. It's tough because so many basic items are seeing sizable price increases: gas, electricity, food, medical care.”
Mike Koncal, Senior Director of Policy and Research at the Economic Security Project, seconded Long’s assessment, posting, “And with this bruiser of an inflation report, there's been no real wage gains for all employees under President Trump. It's zero. For production and nonsupervisory workers, wages are back down to February 2025 levels, with the Iran War erasing around 15 months of previous gains.”
While the Trump administration spent Wednesday morning trying to avoid responsibility for the rising crisis, experts aren’t having it.
“Generally, presidents get too much credit or too much blame for macroeconomic movement,” explained Matt Bennett, co-founder of the moderate think tank Third Way. “But in this case, the cause is blindingly obvious: the idiot in the gold-plated wreck of a White House started a stupid war and imposed stupid tariffs.”