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By Hugh Cameron and Gabe Whisnant
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The second inflation report since the outbreak of the Iran war shows that prices continue to soar on the back of sharp increases in energy costs.
On Tuesday, the Bureau of Labor Statistics (BLS) revealed that the annual headline rate of inflation rose to 3.8 percent in April from 3.3 percent in March, reaching its fastest pace since May 2023 and the highest level across both of Trump's terms in the White House. Consumer prices were up 0.6 percent on a monthly basis following March's 0.9 percent increase.
The headline annual increase came in slightly ahead of analysts’ expectations. Consensus forecasts had annual inflation accelerating to 3.7 percent, though the monthly rate was expected to slow to 0.6 percent.
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And energy prices were once again behind the gains, according to the BLS, accounting for 40 percent of the monthly all items increase.
Meanwhile, annual core inflation—which strips out the food and energy categories—reached 2.8 percent in April, up from 2.6 percent in March, as prices rose 0.4 percent month-over-month. This came in faster than the respective 2.7 percent and 0.3 percent analysts had forecast.
Why Is Inflation Rising?
Inflation was inching closer to the Federal Reserve’s two-percent target toward the end of 2025 and early this year, but the war has since put considerable pressure on consumer price data.
Global oil prices have risen significantly on the back of supply constraints triggered by the Iran war, causing the price of gas—and other downstream products—to soar. According to data from AAA, the cost for a gallon of regular unleaded gas was $4.50 on Tuesday, compared to $4.13 a month prior and up over 50 percent since the conflict began on February 28.
Trump Says Voters’ Financial Concerns Not Driving Iran Talks
Meanwhile, President Donald Trump said Tuesday that voters’ financial concerns were not a factor in his approach to ending the Iran war, as he faced questions on the economic impact of the conflict.
Speaking to reporters ahead of his departure from the White House for a trip to China, Trump was asked whether Americans’ financial situation was influencing negotiations with Tehran.
“Not even a little bit,” Trump said. “The only thing that matters, when I’m talking about Iran: They can’t have a nuclear weapon. I don’t think about Americans’ financial situation. I don’t think about anybody."
He continued, "I think about one thing. We cannot let Iran have a nuclear weapon. That’s all. That’s the only thing that motivates.”
‘True Financial Squeeze’
The administration has in the past celebrated wage growth—which reached 3.6 percent in last month’s jobs report—as a critical economic victory. But Heather Long, chief economist at Navy Federal Credit Union, said that inflation reaching 3.8 percent means rising prices are “now eating up all wage gains for the first time in about three years.”
“This is painful for Americans and a true financial squeeze,” she wrote on X.
The energy index rose 3.8 percent in April after jumping 10.9 percent in March, the BLS said, with gas prices up 5.4 percent and the fuel oil index registering a 5.8 percent increase. On an annual basis, energy prices are now 17.9 percent higher than last April, with fuel oil prices having risen 54 percent over the same period.
The administration has been working to address rising fuel costs. On Monday, Trump told CBS News he was in favor of temporarily suspending the 18-cent federal gas tax, as some lawmakers had urged. However, analysts told Newsweek that this—as well as other domestic measures under consideration—would have little material impact, and that only an end to the conflict could reverse the effects of the worst energy crisis since 2022.
While analysts expected energy costs to heavily affect the figures, the shelter index, which measures changes in the cost of housing, registered a historically outsized monthly increase of 0.6 percent in April. According to economist Justin Wolfers, this is due to the measurement having been suspended during last year’s government shutdown, and the data now playing "catch up.”
Beyond energy, other costs that showed notable increases in Tuesday’s reading included airline fares, which climbed 2.8 percent during the month, as well as beef. Ground beef prices were up 2.7 percent in April and have risen 14.5 percent over the past 12 months amid ongoing cattle supply constraints and rising input costs.
Why Your Grocery Bill Is Still High in 2026
Grocery prices in the U.S. are still rising, but the pace has slowed notably from the sharp spikes seen earlier in the decade, according to recent Consumer Price Index (CPI) data and federal forecasts. Food-at-home prices—what consumers pay in supermarkets—were running at roughly 2–3 percent year-over-year growth in early 2026, broadly in line with or slightly below overall inflation, though some categories continue to outpace the headline figure. Recent data shows uneven pressure across store shelves: while items like dairy have seen flat or falling prices, others such as fruits, vegetables and beverages have posted stronger increases, reflecting ongoing supply and input cost volatility.
Despite this moderation, economists note that grocery bills remain elevated compared to pre-pandemic levels, and new pressures—particularly higher energy costs linked to geopolitical tensions—are feeding back into food production and transport, keeping prices under upward pressure. Federal projections suggest supermarket prices will rise by around 2–2.5 percent through 2026, a more “normal” rate historically, but one that still adds to household costs because food is a non-discretionary expense
Highest Inflation Rate in US History
Consumer Price Index data shows that the highest inflation rates in U.S. history clustered around major wartime shocks, with the most dramatic surge in the early 20th century. Inflation peaked at 20.44 percent in 1918, followed by 18.10 percent in 1917 and 14.55 percent in 1919, as World War I strained supply chains and drove up the cost of goods nationwide. The postwar adjustment then produced sharp volatility, including deflation of -10.82 percent in 1921, underscoring how abruptly prices corrected after the surge.
Later spikes fall short of those highs but still mark key inflationary eras. During World War II and its aftermath, inflation reached 18.13 percent in 1946, while the 1970s stagflation period saw prices climb as high as 13.29 percent in 1979 and 12.52 percent in 1980. By comparison, more recent increases have been far more modest: inflation peaked at 7.04 percent in 2021 and 6.45 percent in 2022 year-on-year before easing back toward roughly 2–3 percent in the mid-2020s.
What Happens Next
Economists expect inflation to remain elevated for as long as the war with Iran continues.
Last week, Trump said the war would be “over quickly”—after which officials have said gas prices could fall “relatively quickly.”
However, Trump on Monday rejected Tehran’s response to a U.S. peace proposal as “a piece of garbage” and said the current ceasefire was on “life support.”
Update, 05/13/26, 12:13 p.m. ET: This article was updated with additional information.
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