The Consumer Price Index (CPI) in the United States reached its highest level on a year-over-year basis in April since 2023. While the surge in gasoline prices (+28.4%) remains the main driver, the contagion is spreading to food and services, now weighing on households’ real purchasing power.
Inflation continues to rise in the United States. It climbed by 3.8% on a year-over-year basis in April, according to official data released on Tuesday. This is the highest rate since May 2023. By comparison, the Consumer Price Index (CPI) increased by 3.3% in March and 2.4% in February.
While gasoline prices have seen a significant jump of 28.4% over the past year, price hikes have also spread across the economy, from grocery shopping to rents. The spike in gasoline prices is affecting not just gas stations, but also farmers, transporters, and manufacturers, who pass on the extra costs in their prices.
“The rising food prices, with food inflation hitting multi-year highs, along with the underlying services—including housing and medical care—has seen their sharpest increase since September. In other words, inflationary pressures are not limited to the gas pump but are evident throughout households’ budgets,” noted Bret Kenwell, an analyst of the American markets for eToro.
“For the first time in three years, inflation is outpacing wage increases. This is a hard blow for middle and lower-class households,” highlighted Heather Long, an economist at Navy Federal Credit Union.
As tensions persist in the Middle East due to Israeli-American strikes on Iran, oil prices remain above $100 per barrel. The aftermath of the war has pushed the average price of regular gasoline to around $4.50 per gallon in the U.S., up from approximately $3 before the conflict, as reported by the American Automobile Association (AAA).
Ahead of the midterm elections, the Trump administration assures Americans that the economic disruptions are temporary. Restoring purchasing power has been a key priority for the White House.
A published consumer sentiment poll on Friday further dampened the American administration’s spirits. The University of Michigan’s sentiment index hit its lowest level since the survey began in November 1952. Nevertheless, the U.S. maintained full employment in April, with a stable unemployment rate of 4.3%, as expected, and the creation of 115,000 jobs, surpassing projections, according to official data released on Friday.
