GEOFF BENNETT: Let's turn now to the economic impact of the war with Iran.

The latest inflation report out today showed price increases for American consumers in April hit a three-year high, driven by a spike in the cost of gasoline.

The Consumer Price Index, which includes energy and food costs, rose 3.8 percent year over year.

That's according to the Labor Department.

And that's compared to 2.4 percent in February, before the start of the war and the closure of the Strait of Hormuz.

To unpack today's numbers, let's turn again to Heather Long, chief economist at Navy Federal Credit Union.

Thanks for being here.

HEATHER LONG, Chief Economist, Navy Federal Credit Union: Thanks for having me.

GEOFF BENNETT: So today's headline inflation rate is the highest we have seen since 2023, up half-a-percentage point from last month.

What stands out to you in this report?

HEATHER LONG: Inflation is a major problem again for the U.S.

economy.

And it's not just gas.

We obviously are all feeling it as we go to the pump to fill up our cars.

But it's also electricity prices.

You mentioned food prices.

Everything from coffee to beef to a lot of vegetables are really up in price, some medical care costs.

And don't forget those airfares have gone way up.

So this is a broad problem, and it's hard for many to hide from.

And the other thing that really stood out in this report is, for the first time in three years, inflation is wiping out all wage gains.

So you mentioned 3.8 percent inflation in the past year versus 3.6 percent wage gains.

That means people are not able to make ends meet right now, a lot of Americans.

GEOFF BENNETT: Yes.

When President Trump -- as he said today, he said he's not prioritizing the economic impact to Americans as he negotiates with Iran.

If the strait continues to stay closed or mostly closed, how severe could that impact become?

HEATHER LONG: Well, we're already starting to see the preview of it so far.

I mean, this data was for April, which feels already like a long time ago as prices continue to climb.

I and many economists think inflation will probably hit 4 percent maybe in May or the June readings.

And, look, if we don't have a resolution to the Middle East conflict, then we could see potentially even higher numbers.

But even -- I think, Geoff, the most important point is, even if we do get that resolution to the war, inflation will remain pretty elevated for the rest of the year.

This isn't going away any time soon.

And I think consumers will continue to feel that squeeze of inflation being above their wage gains probably for most, if not all of the year.

GEOFF BENNETT: Inflation at 4 percent or higher, that's the expectation for the second half of the year?

HEATHER LONG: Not the second half.

For May or June, we may -- we could hit that.

But then inflation will continue to stay elevated, probably above 3 percent, maybe in the 3.5 percent range.

And so that's where it's going to eat up all of those wage gains and people just really can't get ahead in an environment like that.

You can't just not eat your avocado toast or not go on to Disney and instead do a staycation in a tent in the backyard.

That all sounds cute.

But when the costs are rising of gas, of food, of the electricity, these are the basics.

You got to pay those bills.

GEOFF BENNETT: The president yesterday floated the idea of suspending the federal gas tax.

There was also this idea of lowering tariffs on imported beef to ease food prices.

But he pulled back on that amid pushback from domestic beef producers.

Realistically, how much power does a president have to fight inflation in a moment like this?

HEATHER LONG: Not a lot.

President Biden learned that the hard way.

And now President Trump and his administration is really grappling with this.

There's not much they can do.

Even the gas tax would need approval from Congress, so they can't just flip a light switch on that.

And so that's -- his hands are really tied for a while.

And, unfortunately, obviously, people are really upset with the current situation that's going on.

I do think tariffs is probably his easiest option.

That's something he can do.

And certainly a lot of Americans, as they're thinking about those Memorial Day cookouts and what they want to cook and looking at these prices for hamburgers and for steaks, would love to see a little relief.

GEOFF BENNETT: Let's talk about the Fed because Friday's jobs report was relatively steady, but the inflation number complicates this picture considerably.

The president is pushing for lower interest rates.

That, we know.

But with inflation running close to double the Fed's target, what does that mean for the incoming Fed chair, Kevin Warsh?

HEATHER LONG: The outgoing Fed chair, Jerome Powell, probably has to leave a note on his desk for the new Fed chair, Kevin Warsh.

And it probably has to say "Good luck" there somewhere.

These are -- really tough situation right now.

The traditional advice for central banks in an oil price crisis is to kind of ignore it for a while, knowing that eventually it'll go away and prices will reset.

The problem for the Fed right now is, it's not just oil prices, as we were talking about.

Those food prices are going up.

Some medical costs are starting to go up, the electricity prices.

So they can't just totally ignore what's going on.

What it really means for you, me, and everyone we know in America, it means that the Fed is on hold, interest rates are going to stay the same probably for the rest of the year, although December's a long way away.

So maybe we get one cut at the end of the year.

GEOFF BENNETT: Heather Long, always great to speak with you.

Thank you.

HEATHER LONG: Thanks a lot.