U.S. Inflation Rises to 3.8 Percent in April, Highest in Three Years

Consumer prices rose 0.6 percent in April, pushing the annual inflation rate to 3.8 percent, the highest level in three years, according to data released by the Bureau of Labor Statistics on Tuesday. Energy prices climbed 3.8 percent in April after jumping more than 10 percent in March.

Over the past year, energy prices have increased nearly 18 percent. Gasoline prices are up 28 percent and fuel oil prices have risen 54 percent during that period. The increases follow the closure of the Strait of Hormuz on March 2. The strait carries about a quarter of the world's oil production and has remained closed because of the ongoing war between the United States and Iran.

The conflict has also damaged energy production infrastructure around the Persian Gulf, some of which could take years to repair.

Grocery prices categorized as "food at home" rose 0.7 percent in April, the largest one-month increase since August 2022. Electricity prices increased 2.1 percent in April after remaining nearly flat in the first months of the year. Average wage growth over the past 12 months stands at 3.6 percent.

With inflation at 3.8 percent, prices are now rising faster than wages. This reverses the pattern that had held since mid-2023, when wages had been outpacing inflation.

Core inflation, which excludes volatile food and energy prices, stood at 2.8 percent over the past year. The figure represents a small increase from recent months and remains above the Federal Reserve's 2 percent target. The report indicates that a decline in fuel and oil costs could bring overall inflation back below 3 percent.