Inflation rate soared in April, rising higher than expectations
Consumer prices surged in April as continuing energy shocks from the war in Iran reverberated through the economy, according to Labor Department data released Tuesday.
The inflation rate rose to 3.8% in April from a year earlier and 0.6% from the previous month. The annual rate was the highest in nearly three years.
Excluding food and energy, which can swing sharply from month to month, prices rose 2.8% in a year and 0.4% from March, according to the monthly Consumer Price Index.
Gasoline prices shot up 5.4% from March to April.
Prices for household necessities continued to climb: shelter prices rose 0.6% and grocery prices rose 0.7% in April from March. Food prices are up 3.2% year-over-year.
“The rise in diesel fuel, which touches just about everything, shows up rapidly on grocers’ shelves,” Diane Swonk, chief economist of KPMG, wrote on X.
Swonk added that the closure of the Strait of Hormuz has created more than just an energy shock — it has disrupted supply chains in ways that might be felt well into 2027 even if the Iran conflict ended today.
Friday’s inflation numbers were worse than many economists feared and were widespread across the U.S. economy.
Inflation remains significantly higher than the Federal Reserve’s target of 2%. Last month, the Fed kept interest rates unchanged despite a pressure campaign by President Donald Trump to lower them.
With gas prices soaring and overall inflation on the rise, a rate cut risks sending consumer prices even higher. On the other hand, keeping rates high or increasing them could slow economic growth and further squeeze American households and businesses.
Swonk wrote that if inflation keeps surging, the U.S. economy could potentially enter a period of “stagflation,” that is, high inflation and weak or stagnant growth. “We are unlikely to see a repeat of the 1970s,” she wrote, “but the risks are rising.”
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Ella Rae Greene, Editor In Chief
