Inflation rose to 3.8% in April, highest since 2023, as Iran war raised energy prices

Before the war began in late February, crude oil was trading at about $67 a barrel. That price shot up to $100 last month — a massive increase that rattled consumers and caused gas prices to spike.

The increase in inflation spells political trouble for President Donald Trump, who came into office in large part because of voter discontent with high prices under President Joe Biden. Trump and Republicans are running short on time to limit price increases before the midterm elections.

Trump has seen his economic approval ratings fall dramatically since he entered office, in large part because of voter worries about affordability.

The recent increase has been driven in part by spiking energy prices, which have soared as the U.S. and Iran engaged in war.

Notably, core inflation, a measure that strips out volatile food and energy prices, rose two-tenths of a percentage point to 2.8% for the year ending in April.

Families are feeling the strain of higher prices for goods and services they use routinely. For instance, restaurant prices have gone up 3.6% in just the past year. The price of beef and veal has risen a notable 14.8% over the past year. Fruit and vegetable prices have increased by 6.1%, on average.

Clothing prices have risen 4.2%, while electricity prices have jumped 6.1% in the past year.

On the other hand, families looking to buy cars are seeing some relief. Used car prices are down 2.7% from April 2025.

“Net, net, the affordability crisis just got a whole lot hotter for Americans this month with inflation nearly 4 percent higher than a year ago,” said Chris Rupkey, chief economist at FWDBONDS. “It isn’t just gasoline prices at the pump that are soaring, it is literally the price of a roof over your head with shelter costs jumping 0.6% in April.”

This latest inflation report comes after the Federal Reserve voted to hold interest rates steady at its meetings in January, March, and April, pausing after cutting interest rates three times last year.

While the Fed continues to monitor slowdowns in the labor market, it has had to remain attentive to the fact that inflation is running above target. At the same time, it has faced pressure from the White House for the central bank to cut rates.

The Fed’s next meeting is set for June, and it will, presumably, be the first meeting with Kevin Warsh as chairman. Warsh was nominated by Trump to replace Fed Chairman Jerome Powell, and he is expected to be confirmed to the role this week.

In addition to inflation, the Fed is also closely tracking employment data, particularly given that there has been a gradual decline in job growth over the past year — although recent job reports have been strong.

Last week, the Bureau of Labor Statistics reported that 115,000 jobs were added in April, a relatively strong report. The unemployment rate also held steady at a relatively low 4.3%, giving the Fed a bit more wiggle room to keep interest rates where they are.