August M
US inflation accelerated sharply in April, reaching its highest level in almost three years as rising energy costs linked to the Iran conflict continued to spread through the economy.
New data also showed consumer prices are now increasing faster than wages for the first time since 2023, adding pressure to households already struggling with living costs, reports NBC News.
Energy drives surge
According to the Bureau of Labor Statistics, annual inflation rose to 3.8% in April, while prices increased 0.6% compared with the previous month.
Officials said soaring energy costs were responsible for a large share of the increase.
“The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all items increase,” the agency said.
Oil prices have climbed more than 70% since the start of the year, while average gasoline prices in the United States have risen to around $4.50 per gallon.
Core inflation, which excludes food and energy, also increased by 0.4%, coming in above economists’ expectations.
Pressure on households
NBC News reported that wage growth has slowed in recent years, with average earnings rising 3.6% in April compared with inflation running at 3.8%.
Economists warned that shrinking purchasing power could worsen affordability problems for many Americans.
“Inflation is a regressive tax, which hits the ranks of those who can afford it least,” KPMG chief economist Diane Swonk said.
The report showed grocery prices increased 0.7% during April, marking the steepest monthly rise in nearly four years.
Transportation-related costs also rose, with airfares jumping 20% compared with a year earlier as airlines grappled with higher fuel expenses.
Supply chain fears
Analysts say the conflict involving Iran and disruption around the Strait of Hormuz are contributing to broader supply chain instability.
Before the conflict escalated, more than one-fifth of global oil and gas shipments passed through the strategic waterway.
Swonk warned the economic effects may continue long after the immediate crisis ends.
“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,” she said.
Some consumer sectors offered limited relief, with prices easing slightly for new vehicles, healthcare and communications services.
However, economists cautioned inflationary pressures could intensify further in the months ahead.
Sources: NBC News, Bureau of Labor Statistics, KPMG, Citigroup, Argus
