US April CPI Rises 3.8%, Highest Since May 2023, as War-Driven Oil Shock Persists

US consumer prices rose sharply again in April after a strong increase in March, bolstering expectations that the Federal Reserve will keep interest rates on hold for now.

CPI rises 3.8% from a year earlier

Odds of rates staying unchanged through year-end increase

The US Bureau of Labor Statistics said on May 12 that the consumer price index rose 0.6% in April from a month earlier, matching market expectations. That followed a 0.9% increase in March.

From a year earlier, CPI climbed 3.8%, the highest since May 2023, after rising 3.3% in March. Core CPI, which excludes food and energy, increased 0.4% from a month earlier, quickening from 0.2% in the previous month.

Much of the inflation pressure came from a jump in oil prices tied to the war. International crude rose above $100 a barrel after US and Israeli airstrikes on Iran, intensifying price pressures. Oil prices eased somewhat after an early-April ceasefire, but remained elevated.

Bloomberg Economics said higher gasoline prices and airfares linked to the Iran war kept both headline and core CPI firm in April. Investors expect the energy-price shock to spill over into other goods and services over the next several months.

That has fueled views that the benchmark rate may remain unchanged through 2027. The Fed left its policy rate at 3.50% to 3.75% last month.

Separately, the impact of the Trump administration's broad tariff measures on inflation has largely faded, according to the report. The effective tariff rate fell after the US Supreme Court invalidated the tariffs in February.

Persistent inflation is set to become a political burden for President Donald Trump and Republicans ahead of the November midterm elections. Reuters reported that Trump won re-election in the 2024 presidential election after making inflation control a central campaign pledge, but frustration over his economic stewardship has been rising among US voters. In particular, more voters are blaming Trump for the recent surge in gasoline prices, Reuters said.

Lee Hye-in, Korea Economic Daily reporter hey@hankyung.com