Consumer Prices Rise 3.8 Percent in April as Gasoline Jumps 28 Percent

U.S. consumer prices rose 0.6 percent in April and 3.8 percent from a year earlier, the Bureau of Labor Statistics reported Tuesday, the biggest annual jump in three years, the Associated Press reported. The monthly rise followed a 0.9 percent jump in March. Economists had expected the annual figure to be 3.7 percent, Fox Business reported.

Gasoline did most of the damage. The BLS said the gasoline index rose 5.4 percent in April and is up 28.4 percent over 12 months, and the energy index rose 3.8 percent in the month and 17.9 percent over the year. Fox Business reported that energy accounted for more than 40 percent of the monthly increase. The Associated Press, via PBS NewsHour, tied the surge to the war with Iran, which began Feb. 28 and led Iran to shut the Strait of Hormuz, through which about a fifth of the world’s oil and liquefied natural gas passes. AAA put the average regular gallon above $4.50 on Tuesday, the AP said, about 44 percent higher than a year ago.

Excluding food and energy, core prices rose 0.4 percent in April and 2.8 percent from a year earlier, the BLS said. Economists had forecast 0.3 percent and 2.7 percent, according to Fox Business. Seema Shah of Principal Asset Management told the outlet the core surprise “is more consequential” than the headline number because it suggests price pressure beyond energy.

Food and housing also rose. Food prices climbed 0.5 percent in the month and 3.2 percent over the year, with groceries up 0.7 percent from March, the AP said, as meat prices rose. Fox Business reported that beef and veal were up 14.8 percent from a year earlier, while eggs were down 39.2 percent as supplies recovered from avian flu. Shelter rose 0.6 percent in April and 3.3 percent over 12 months, and airline fares were up 20.7 percent over the year, Fox Business reported.

Paychecks are not keeping up. Average hourly earnings fell 0.3 percent over the year after adjusting for inflation, the first annual drop in three years, the AP reported. Heather Long, chief economist at Navy Federal Credit Union, wrote that “inflation is eating up all wage gains,” calling it a setback for middle- and lower-income households.

The numbers complicate the Federal Reserve’s task as Jerome Powell’s term as chair nears its end. Fox Business noted that the Fed held rates steady at its latest meeting. Shah expects a cut in December at the earliest, with rising risk it slips to 2027. The AP noted that President Trump has criticized the Fed for not cutting, and that the Senate is expected to confirm his choice to succeed Powell, Kevin Warsh, this week. It is unclear whether Warsh would pursue lower rates given the uncertainties arising from the war, the AP said, and whether he could persuade colleagues to go along.

One caveat: Fox Business said economists believe the BLS’s skipped October report and missing November data after last fall’s 43-day government shutdown likely impart a downward bias on inflation readings.

Affordability is likely to be a key issue when voters go to the polls Nov. 3, the AP said.