Inflation Revs Back Up to 3.8% as Gasoline Torches American Wallets

America’s inflation fight is getting dragged back to the gas pump again. US consumer prices climbed 3.8% annually in April, the hottest reading since May 2023, as the Iran war pushed energy costs sharply higher. Oil and gasoline accounted for more than 40% of the monthly CPI increase, putting fresh pressure on the broader economy.

• Monthly CPI rose 0.6%, while core inflation, which strips out food and energy, accelerated to 2.8% year-over-year.
• The broader energy index climbed 17.9% over the past year, pushing fresh fruit and vegetable prices to their biggest monthly increase since 2010.

Evaporating hopes: Inflation is once again outpacing wages, with real average hourly earnings falling 0.5% in April and slipping 0.3% from a year ago. Navy Federal’s Heather Long called inflation the economy’s “key drag,” warning that consumers are facing “a real financial squeeze.” Traders are now pricing in roughly 30% odds of a Fed rate hike by year-end — a harsh inheritance for incoming Chair Kevin Warsh.