Inflation Surges to 3.8% on High Gas Prices

US consumer prices climbed sharply again last month as the 10-week war with Iran pushed energy prices higher. The Labor Department reported Tuesday that its consumer price index rose 3.8% from April 2025, per the AP. That's above expectations of 3.7% and a sharp uptick from last month's 3.3%, reports the Wall Street Journal. It's also the highest reading since May 2023, notes CNBC. The Journal attributes most of the rise to high gas prices. Stock futures on the benchmark S&P 500 slipped modestly into the red when the report came out.

• On a month-to-month basis, April prices rose 0.6% from March as gasoline prices rose 5.4%.
• Excluding volatile food and energy costs, so-called consumer core prices rose 0.4% last month from March and 2.8% from April 2025, relatively modest readings that suggest the energy price burst isn't spilling over much yet into other prices.

• Inflation had been dropping more or less steadily since peaking with a 9.1% year-over-year spike in prices in June 2022, a surge caused by supply chain bottlenecks at the end of COVID-19 lockdowns and an energy price shock following the Russian invasion of Ukraine. The Iran war, however, has reversed the trend.
• The Fed, which had been expected to cut its benchmark interest rates in 2026, has turned cautious as it waits to see how long the conflict lasts and whether higher energy prices spill over into other products. The central bank wants inflation at 2%.