Poli Alert Politics & Civics
Related Articles
Inflation accelerated to 3.8% in April, its highest annual rate in nearly three years, as the war involving Iran continued to disrupt global energy markets and drive up costs across the U.S. economy.
New data released Tuesday by the Bureau of Labor Statistics showed consumer prices rose 0.6% in April from the previous month, while core inflation — which excludes volatile food and energy prices — increased 0.4%, higher than economists had expected.
The report also marked a troubling milestone for consumers: prices are now rising faster than wages for the first time since 2023, raising concerns that affordability pressures could intensify in the months ahead.
Wage growth slowed to 3.6% in April, according to last week’s jobs report, down from nearly 4% growth recorded late last year.
“Inflation is a regressive tax, which hits the ranks of those who can afford it least,” said KPMG chief economist Diane Swonk.
Much of the inflation surge was tied to rising energy costs fueled by instability in the Middle East. Oil prices have climbed more than 70% since the start of the year, while the national average gasoline price reached roughly $4.50 per gallon Tuesday.
“The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all items increase,” the BLS said in a statement.
Economists warned the full impact of higher energy prices may not yet be reflected in broader consumer costs.
“Energy costs likely would not start to feed through to core goods prices for at least a few more months,” Citigroupanalysts wrote in a note to clients Monday.
Higher fuel costs have already begun affecting transportation and travel expenses. Airfares rose 20% compared with a year earlier as jet fuel prices surged approximately 60% since the conflict involving Iran began, according to energy market data from Argus.
Several airlines, including Delta Air Lines, United Airlines and Southwest Airlines, have increased baggage fees, while some international carriers added fuel surcharges to ticket prices.
The United States Postal Service also implemented a temporary price increase in April to offset rising fuel expenses.
Grocery prices posted one of the sharpest increases in years, with the “food at home” category rising 0.7% in April — the largest monthly jump in nearly four years. Services prices, including transportation-related costs, increased 0.5%.
Swonk said rising diesel fuel prices are rapidly affecting food supply chains and consumer costs.
“The rise in diesel fuel, which touches just about everything, shows up rapidly on grocers’ shelves,” she said.
“The jump in diesel costs happened even faster ahead of the spillover effects that shortages can have across supply chains, including fertilizer and the food supply.”
Not all categories saw increases. Prices for new vehicles, medical care, health insurance and communications services edged lower during the month. Used vehicle prices were flat, while vehicle maintenance costs declined slightly.
Still, economists cautioned inflation pressures could worsen if disruptions continue around the Strait of Hormuz, a critical global shipping corridor off Iran’s southern coast through which more than 20% of the world’s oil and gas supply previously traveled.
Since the conflict escalated, ship traffic through the strait has dropped sharply, worsening supply chain concerns.
“The closure of the Strait of Hormuz is more than an energy shock; it is roiling supply chains around the world in ways that echo the disruptions we saw during the pandemic,” Swonk wrote Tuesday.
She warned consumers could continue feeling the effects of rising energy and transportation costs “well into 2027,” even if maritime traffic through the strait resumes soon.
