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Worst of US Inflation May Be Over if Iran Peace Deal Holds

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The worst of the recent rise in US inflation may have passed if the peace agreement between the US and Iran holds, Bloomberg reported Monday, citing economists who expect easing energy costs to reduce price pressures.

Citigroup Chief US Economist Andrew Hollenhorst said that while energy markets remain difficult to forecast, "everybody would agree the direction is down" for oil prices following the agreement, according to the report.

US annual inflation accelerated to 4.2% in May, the highest level in more than three years, with more than half of the monthly increase driven by energy costs, Bloomberg reported. Economists expect inflation to moderate as gasoline prices decline and shipping through the Strait of Hormuz gradually returns to normal.

"Second-round effects from the war - from crude oil into other commodity prices - also appear to have peaked," Bloomberg Economics Chief US Economist Anna Wong wrote in a note, according to the report.

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