US inflation jumped to 3.8% in April as war with Iran continues to drive up prices

US inflation jumped to 3.8% in April as the war in the Middle East continued to drive energy prices and everyday costs for Americans.

Prices rose 3.8% over the last year, according to the data from the Bureau of Labor Statistics, the highest jump since 2023.

This is the second official measure of the consumer price index, which measures the price of a basket of goods and services, since the start of the war with Iran. In March, prices rose 3.3%, up from 2.4% in February.

Energy prices continued to climb, reflecting the national average price for a gallon of gas which is more than a dollar higher than a year ago, according to data from AAA.

Higher energy prices directly stems from the ongoing closure of the strait of Hormuz, where a fifth of the world’s oil and gas would typically pass through. Oil prices continued to climb Monday after Donald Trump called Iran’s response to US peace proposals “totally unacceptable”. Iran suggested a shorter moratorium period and refused to dismantle its nuclear facilities.

It’s not just Americans who are feeling the costs war: Australia, Canada, South Korea and other countries have all reported rapidly rising inflation. British households are bracing for a new cost of living crisis, according to a new survey from PwC released on Monday, and Asia’s manufacturing sector has already reported signs of strain and started to drive up costs.

Despite the rise in prices, the Trump administration is still continuing its campaign for lower interest rates, which would make borrowing money cheaper in the US. The Fed typically raises interest rates during times of heightened inflation in order to cool spending and ease prices.

Though Kevin Warsh, the incoming US Federal Reserve chair, has made it clear he agrees interest rates should be lower, rising inflation may make it harder for him to make the case to do so.

Warsh will have to convince the rest of the Fed’s 11 voting members that, despite increasing prices, the Fed should continue cutting rates. Just one member of the board voted to lower rates at its meeting last month, with the board citing slow job growth and uncertainty in the Middle East as key factors in its decision. Rates currently sit at a range of 3.5% to 3.75%.

The US Senate is expected to confirm Warsh as Fed chair in the coming days. The end of outgoing Fed chair Jerome Powell’s term is on Friday.