US inflation accelerates as gas, rent and food prices climb

US inflation continued to accelerate in April amid an ongoing climb in gasoline prices driven by the Iran war and a jump in the cost of groceries.

The consumer price index rose 3.8% from a year earlier, according to Bureau of Labor Statistics data out Tuesday, marking the fastest pace since 2023. From a month earlier, prices were up 0.6%.

The core CPI, which excludes food and energy, increased 0.4% from a month earlier and 2.8% from a year earlier, boosted in part by a statistical quirk in the report’s measure of rents resulting from the 2025 government shutdown.

The figures show how the impact of the war is hitting the US economy as energy costs surge. The BLS report indicated gas prices rose more than 5% last month following a 21% jump in March. Grocery prices and airfares also saw large increases. A sustained pickup, especially in the cost of essentials, could lead consumers to cut back on spending.

Stock futures and Treasuries remained lower following the release.

Even if the current ceasefire holds and the Strait of Hormuz reopens soon, economists anticipate higher costs are likely to persist in the months ahead as oil output normalizes and shipping flows recover. Rising prices for fertilizer are expected to result in higher grocery bills, and elevated oil prices could also make other goods and services more expensive as companies seek to pass rising transport costs on to consumers.

One of the main examples in the April CPI data was airfares: They rose 2.8% from a month earlier as the surging cost of jet fuel prompted airlines to raise prices and baggage fees and cut capacity. Overall services costs excluding energy and housing rose 0.5%, according to data compiled by Bloomberg. Hotel prices rose 2.8%, the most since 2024.

Grocery prices rose 0.7%, the most in almost four years. Meats, dairy, fresh fruits and vegetables all posted notable gains. Food prices have been a major contributor to affordability concerns in recent years and could play into Americans’ views of the economy heading into midterm elections.

A separate report Tuesday that combines the inflation figures with recent wage data showed that real average hourly earnings fell 0.3% from the year before, marking the first drop in three years.

Core inflation got a lift in April from the index’s measures of rents, which were distorted by last year’s government shutdown. Shelter costs were up 0.6%, the most in more than two years.

The rent measures are based on rolling samples of rental housing units collected every six months, and the BLS effectively left them unchanged in October because it wasn’t able to collect data during the shutdown. When those units were priced again in April, they captured a year of increases rather than six months’ worth, making the monthly change in rents look about twice as large as normal.

Meanwhile so-called core goods prices, excluding food and energy, were unchanged thanks to a slump in prices for new vehicles. Economists have been watching for signs that retailers have finished passing on the higher costs from President Donald Trump’s tariffs, even as the risk that higher fuel prices start pushing goods prices up again looms for later in the year. Some categories that are more exposed to tariffs — including apparel and toys — rose at a more moderate pace than in March. Used-car prices were flat.

With the US labor market holding up, Federal Reserve officials are closely tracking the impact the war will have on prices. Investors see little chance of another interest-rate cut in 2026, according to futures, though some economists are still forecasting a reduction later in the year.

That Fed’s preferred measure of inflation, based on the personal consumption expenditures price index, doesn’t put as much weight on shelter as the CPI. A government report on producer prices due Wednesday will offer insights on additional categories — including a measure of airfares — that feed directly into the PCE, which is scheduled for release later this month.

–By Mark Niquette (Bloomberg)