Iran War Sends Gas Prices Higher, Lifting U.S. Inflation To 3.8% Annually

TL;DR

April CPI hit 3.8% annually as Iran-war oil shocks drove energy up 18% and gas up 28%, pushing inflation further from the Fed's 2% target.

Key Points

• 1.The Iran war is the primary inflation driver via energy prices. Gas is up 28% and energy overall up 18% year-over-year, with knock-on effects pushing airfares up 21% and food prices up 3%, as fuel and fertilizer costs spike due to shipping disruptions.
• 2.Overall U.S. inflation reached 3.8% annually in April, with monthly CPI at 0.6%. Core inflation (excluding food and energy) sits at 2.8%; both figures are well above the Federal Reserve's 2% healthy target and mark the worst readings since the 2022 40-year high.
• 3.Specific goods show extreme price swings in both directions. Tomatoes surged nearly 40% (the U.S. imports ~70% of its supply, compounded by tariffs), while smartphones fell over 12% and used cars dropped 2%, offering limited relief to consumers.