Inflation rose steadily in April as soaring energy prices once again ballooned consumer prices, according to federal data released Friday, the latest report showcasing the economic pressures of the Iran war on Americans.
Higher inflation has persisted as rising prices pressure consumers.
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Consumer prices rose 3.8% from April 2025 and 0.6% between March and April, the Bureau of Labor Statistics reported, exceeding consensus analyst estimates of an annual 3.7% increase.
That’s the highest annual growth rate since May 2023 (4%).
The energy index, which tracks consumer prices for fuel and utilities, like gasoline, rose 3.8% in April after a 10.9% surge in March, accounting for roughly 40% of all price increases tracked by the Bureau of Labor Statistics.
Airline fares have surged by 20.7% over the last 12 months, the largest annual increase since February 2023, as fuel oil prices jumped 5.8% month-to-month.
Core inflation, or the rate at which prices rose excluding food and energy, was 2.8% in April, ahead of consensus projections of 2.7%, indicating that inflationary pressures remained outside energy.
President Donald Trump told CBS News he planned to suspend the federal gas tax to provide some economic relief at gas stations. The tax would be suspended for a “period of time,” Trump said, adding it would be re-implemented as soon as gas prices lowered. It’s unlikely this would mitigate the pressure of higher gas prices, however, as the federal gas tax adds just 18.3 cents per gallon of gasoline and 24.3 cents per gallon of diesel. As of Tuesday, the average price for a gallon of gas would be reduced to $4.32, down from $4.50. The cost for a gallon of diesel would be lowered to about $5.40, down from $5.64.
Minutes from the Federal Reserve’s latest policymaking session will be released on May 20, offering some insight into how the central bank approached interest rates. The Federal Open Market Committee voted 8-4 to hold interest rates between 3.5% and 3.75% in April, the most dissenting votes since 1992, as the Federal Reserve noted inflation remained “elevated” as the Iran war fueled a surge in energy costs.
Americans’ views on the U.S. economy reached an all-time low in April before stumbling to another record low in May, according to the University of Michigan’s consumer sentiment survey. Joanne Hsu, the survey’s director, said consumers “continue to feel buffeted by cost pressures, led by soaring prices at the pump.” Hsu noted that developments in the Middle East, including recent peace talks and a ceasefire deal, are unlikely to boost sentiment anytime soon until oil supply disruptions are fully resolved and energy prices fall. Consumers’ opinions of their current financial situation dropped to their lowest level since 2009, even as their inflation expectations eased, with respondents expecting costs to rise 4.5% over the next year. Nationwide chief economist Kathy Bostjancic has cautioned that it could take months for oil, gas, diesel and other energy commodity prices to “snap back” to pre-war levels.
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