Consumer prices in the United States rose at the fastest rate since May 2023 in April, as sharp increases in energy costs caused by war in the Middle East made life more expensive for American consumers.
The consumer price index rose 3.8 per cent in April from a year earlier, the Labor Department reported on May 12, up from a 2.4 per cent annual increase before the conflict started in February and a 3.3 per cent increase in March.
The increase was driven largely by energy prices, up 3.8 per cent since the previous month. But the “core” index, stripping out volatile food and energy prices, also rose 2.8 per cent over the year in April, up from 2.6 per cent in March.
As the heat from US President Donald Trump’s tariffs has faded from inflation readings in 2026, shortages of commodities blocked from transiting through the Strait of Hormuz are taking its place as a pressure on prices. Average petrol prices are above US$4.50 per gallon, according to AAA, while diesel prices have nearly doubled.
Higher fuel costs are bleeding into prices for transportation, including airline fares, which rose 2.8 per cent in April, as well as goods that get to market in a truck or on a boat. Grocery costs rose 2.9 per cent since April 2025, driven largely by the price of beef, which has been rising because of smaller cattle herds.
A statistical quirk also pushed up the index, as federal surveys caught up from the government shutdown in autumn. Unable to collect housing data on its normal schedule, the Bureau of Labor Statistics had to wait until April, masking what might have been a swifter deceleration given cooling rents and home prices. Rents and the measure of costs for people who own their home both rose 3.3 per cent over the year, up from an annual increase of 3 per cent for the previous three months.
Business leaders also see the higher costs filtering into prices. Chief executives surveyed quarterly by the Cleveland Fed on average see inflation running at 3.7 per cent over the next year, the highest expectation since April 2025, after Mr Trump imposed sweeping tariffs on most of the rest of the world.
After the Supreme Court overturned that subset of tariffs, the average overall tariff rate stands at about 11 per cent, according to the Yale Budget Lab – before taking into account how consumers have gravitated towards goods subject to lower tariffs.
Consumers have registered their disapproval with higher prices as well, through record low economic sentiment measures and deeply negative approval ratings for Mr Trump’s handling of the economy.
Although the Federal Reserve has said it looks past swings in energy costs, as they are generally expected to recede before translating into underlying inflation, the hotter-than-expected measure will weaken the case for cutting interest rates in 2026. With the strong jobs report last week, many analysts had already moved back their forecasts for cuts into 2027. NYTIMES
