US consumer prices rose 3.8% in April, marking the highest jump since May 2023. This increase follows a 3.3% year-over-year gain in March and exceeded the 3.7% increase expected by the Dow Jones consensus.
The spike was primarily driven by soaring energy and food prices, with petrol costs rising nearly 30% over the last year. These increases are attributed to the Iran war and conflict in the Middle East, with energy costs replacing tariffs as the main driver of higher prices for Americans.
Wholesale inflation also accelerated to its fastest pace since 2022, with final demand inflation rising 6% on an annual basis in April. This surge in energy prices has subsequently fed into higher freight transportation costs.
The rising costs of gasoline and groceries are eating away at paychecks and threatening household spending. According to government data, real wages have fallen for the first time in three years as the worst inflation in years impacts consumers.