US prices rose in April at their fastest rate since May 2023 as the impact of the war in Iran was increasingly felt by consumers. A jump in the cost of gasoline and groceries pushed the consumer price index (CPI), showing the rate prices rose by in the past 12 months, to 3.8%.
It is the highest level since inflation hit 4% three years ago.
The Bureau of Labor Statistics (BLS) said almost half of the rise was driven by surging energy costs, while housing and food costs also contributed.
The US-Israel war in Iran, and the resulting effective closure of the key Strait of Hormuz shipping lane, has led to a jump in oil prices and this has caused a surge in the price of gas in the US.
The national average price for a gallon of unleaded is at its highest level since July 2022, at $4.50 (£3.33), according to data from the AAA motoring group.
The rise in April’s inflation figure, from 3.3% in March, makes it increasingly unlikely the Federal Reserve will cut interest rates this year.
Isaac Stell, investment manager at the Wealth Club, said the inflation increase even left possible interest rate hikes “firmly on the table”.
It comes days before Trump appointee Kevin Warsh is set to take over from Jerome Powell as chair of the US central bank.
Stell said the incoming chair would enter the role with “little room for manoeuvre” and may be forced to take a more conservative approach.
Trump had clashed with Powell over his reluctance to cut the central bank’s interest rate, which the president hoped would spur on the US economy, and has made it clear he expects Warsh to push for cuts.
It also poses a challenge for US President Donald Trump and the Republicans ahead of November’s midterm elections, after Trump’s 2024 re-election campaign focused largely on his plans to cut inflation.
Air fares and clothing also increased in the year to April, while the price of new cars fell slightly.
By BBC News
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