U.S. consumer prices rose 3.8% annually in April, above expectations, as energy, food, shelter and travel costs added to inflation pressure.
U.S. consumer prices rose faster than expected in April, lifting the annual inflation rate to 3.8%, its highest level since May 2023, the Bureau of Labor Statistics reported Tuesday.
The consumer price index increased 0.6% on a seasonally adjusted monthly basis. That monthly move matched the forecast cited by Dow Jones, but the annual rate came in 0.1 percentage point above the 3.7% consensus estimate, underscoring renewed inflation pressure across the economy.
The report matters because inflation remains above the Federal Reserve’s 2% goal at a moment when policymakers have been holding interest rates steady and weighing how long restrictive policy may need to remain in place. Core CPI, which excludes food and energy and is closely watched as a signal of underlying inflation, rose 0.4% for the month and 2.8% from a year earlier.
Energy was a major source of the increase, rising 3.8% in April and 17.9% over 12 months. Gasoline prices were up 28.4% annually. Food prices climbed 0.5% for the month and 3.2% from a year earlier.
Price gains were not confined to fuel and groceries. Shelter costs rose 0.6% after easing in prior months. Apparel increased 0.6%, airline fares jumped 2.8%, and household furnishings and operations rose 0.7%, according to the report.
The inflation figures also pointed to pressure on workers’ purchasing power. Real average hourly wages fell 0.5% in April and were down 0.3% from a year earlier.
“Inflation is the key drag on the U.S. economy now,” Heather Long, chief economist at Navy Federal Credit Union, said in the CNBC report. “This is hurting Americans. There is a real financial squeeze underway.”
Financial markets reacted cautiously after the release. Stock market futures were negative, Treasury yields moved higher, and traders increased the implied odds of a Federal Reserve rate hike by year-end to about 30%, according to CME Group data cited in the report.
The data arrive after the Fed voted in late April to keep its benchmark rate unchanged. The captured report said the decision drew four dissents, the most since 1992, reflecting internal tension over the central bank’s next move and the language used to signal policy direction.
The next major test will be whether the April acceleration proves temporary or feeds into broader price-setting and wage dynamics. For now, the report gives the Fed less room to ease policy and gives households another month of higher costs across essential and discretionary categories.
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