US inflation jumps to 3.8% as energy costs surge from Iran war

The key measure of US inflation rises its highest level since May 2023 as consumers feel the impact of the Iran war. US inflation jumps to 3.8% as energy costs surge from Iran war Copyright current_year BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking. Copyright current_year BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking. A man palms his forehead in frustration while filling his truck up with gasoline. US prices rose in April at their fastest rate since May 2023 as the impact of the war in Iran was increasingly felt by consumers. A jump in the cost of gasoline and groceries pushed the consumer price index (CPI), showing the rate prices rose by in the past 12 months, to 3.8%. It is the highest level since inflation hit 4% three years ago. The Bureau of Labor Statistics (BLS) said almost half of the rise was driven by surging energy costs, while housing and food costs also contributed. The US-Israel war in Iran, and the resulting effective closure of the key Strait of Hormuz shipping lane, has led to a jump in oil prices and this has caused a surge in the price of gas in the US. The national average price for a gallon of unleaded is at its highest level since July 2022, at $4.50 (£3.33), according to data from the AAA motoring group. The rise in April's inflation figure, from 3.3% in March, makes it increasingly unlikely the Federal Reserve will cut interest rates this year. Isaac Stell, investment manager at the Wealth Club, said the inflation increase even left possible interest rate hikes "firmly on the table". It comes days before Trump appointee Kevin Warsh is set to take over from Jerome Powell as chair of the US central bank. Stell said the incoming chair would enter the role with "little room for manoeuvre" and may be forced to take a more conservative approach. Trump had clashed with Powell over his reluctance to cut the central bank's interest rate, which the president hoped would spur on the US economy, and has made it clear he expects Warsh to push for cuts. It also poses a challenge for US President Donald Trump and the Republicans ahead of November's midterm elections, after Trump's 2024 re-election campaign focused largely on his plans to cut inflation. It also poses a challenge for US President Donald Trump and the Republicans ahead of , after Trump's 2024 re-election campaign focused largely on his plans to cut inflation. Air fares and clothing also increased in the year to April, while the price of new cars fell slightly. April's inflation figure also marked the first time in three years that Americans' pay packets are no longer growing faster than prices are rising. While prices rose by 3.8% for the year to April, average paychecks grew by just 3.6%. US stock markets opened lower on the news with the S&P 500 falling 0.6% and the Dow Jones Industrial Average down 0.7%. An employee pumps fuel into a customer's motorbike at a petrol station in Hanoi, Vietnam Oil price predicted to remain above $100 for rest of year A street in the US with pedestrians walking around and a US flag hanging from a building. US jobs data beats expectations for second month in a row The possibility of a change of leadership in the UK has unsettled some investors and sent bond yields higher. The BBC takes a look in charts at what the UAE's departure could mean for the oil cartel and more widely. The Bank of England's latest report reveals some interesting details on how our finances will be affected due to the Iran war. The solid figures came despite rising gas prices and economic uncertainty sparked by the Iran war. How much Donald Trump can do with the time he has left as president will depend massively on the cost of living. The current level of tariffs charged on goods entering the US from the EU is 15%, under a deal negotiated last July. How the US President Donald Trump and Federal Reserve chair Jerome Powell came to blows. He denied making a deal with Donald Trump on interest rates and backed "policy regime change" at the central bank.