US Annual Inflation Hits 3.8% in April as Iran War Drives Energy, Food Price Rises

US consumer prices saw their sharpest annual acceleration since May 2023, with the Consumer Price Index (CPI) climbing to 3.8% in April. This marks the highest inflation rate recorded in the past three years, driven predominantly by the economic fallout from the US-Israel war in Iran.

Data from the Bureau of Labour Statistics (BLS) indicates that soaring energy prices accounted for nearly half of April's increase, compounded by rising housing and food costs. The effective closure of the Strait of Hormuz, a crucial shipping lane, due to the ongoing conflict, has directly influenced the price of petrol across the United States. The national average for unleaded petrol has reached $4.50 per gallon, its highest point since July 2022.

This inflationary trend, up from 3.3% in March, significantly diminishes the likelihood of the Federal Reserve implementing interest rate cuts this year. The persistent price rises also present a considerable hurdle for President Donald Trump and the Republican party ahead of the November midterm elections, given Mr Trump's re-election campaign emphasis on inflation reduction. Airfares and clothing prices also rose over the year to April, while the cost of new cars experienced a minor decline.