Consumer prices in the U.S. rose for the second consecutive month, marking the largest annual increase in nearly three years, as energy prices soared due to the U.S.-Israel war against Iran.
U.S. consumer prices rose 0.6% in April, following a 0.9% increase in March, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) report released Tuesday.
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Prices rose 3.8% on an annual basis, the biggest increase since May 2023. Prices in March rose 3.3%.
This increase was due to soaring energy prices, including a 5.4% increase in gasoline and gasoline prices.
On an annual basis, the increase is remarkable. Energy prices have increased by 17.9 percent over the past 12 months, and gasoline prices have increased by 28.4 percent compared to this time last year.
According to the American Automobile Association (AAA), which tracks daily gasoline prices, the average price of a gallon (3.78 liters) of gasoline is $4.50. When the US and Israel first attacked Iran on February 28, the average price was $2.98.
“The shift in energy costs to non-energy prices has been most pronounced in airfares, where airlines have had to raise prices to cover higher jet fuel prices,” Bernard Jarosz, chief U.S. economist at Oxford Economics, said in a report provided to Al Jazeera.
Airfares increased by 2.8% from the previous month. Rising jet fuel costs are putting a strain on airlines, including Spirit Airlines, which suspended operations earlier this month after 34 years. In court documents, the airline blamed the rise in fuel costs on “recent geopolitical events.”
“I don’t care about the economic situation of Americans.”
On Tuesday, US President Donald Trump was asked whether the economic situation facing Americans was a motivator for striking a deal with Iran. The president replied, “Not in the slightest.”
President Trump told reporters: “The only thing that matters when we talk about Iran is that Iran cannot have nuclear weapons. I don’t care about the economic situation of Americans. I don’t care about anyone. The only thing I think about is that we can’t let Iran have nuclear weapons.”
The White House said in a statement to Al Jazeera that the price hike is likely to be temporary.
“President Trump has always been clear about the temporary disruption as a result of Operation Epic Fury,” White House Press Secretary Khush Desai told Al Jazeera.
Economists expect prices to remain high due to the conflict with Iran.
“We still expect CPI inflation to peak this quarter at a pace well below pandemic-era highs. Core CPI will continue to rise this year, but it is unlikely to rise significantly from here,” Jarosz said.
food prices rise
Food prices also rose, rising 0.7%. Prices of meat, poultry, fish and eggs rose 2.7% from the previous month. In particular, beef prices rose by 2.7%.
Fruit and vegetable prices rose by 1.8%. Compared to this time last year, products containing tomatoes are up almost 40 percent, and at this time last month alone they were up more than 15 percent.
Coffee prices increased by 18.5% compared to the same period last year and by 2% compared to last month.
“Every time there is a war, prices rise and will continue to do so for months after the war ends,” Alex Jack, a former member of the White House National Economic Council under former US President Joe Biden, said in a statement provided to Al Jazeera.
But egg prices are down 39 percent compared to this time last year, a figure the White House touted in a post on social media platform X. However, prices have increased by 1.5% month on month.
The White House also noted that smartphone prices are down 12% since this time last year, but are up 1% since this time last month.
Smartphones were exempt from tariffs imposed by President Donald Trump last year.
Prices also rose in other sectors subject to tariffs, with clothing prices rising 0.6% and overall electronics prices rising. Bedroom furniture and toys both rose 0.8%.
On the other hand, medical expenses decreased. Overall, drug prices are down 0.4% from this time last month and 0.5% from this time last year. Prescription drug prices were flat month-over-month, down 0.9%.
“However, the April CPI report confirms that despite these disruptions, President Trump’s long-term economic policies continue to deliver. Thanks to the president’s most-favored-nation and price-transparency efforts, prices for medicines and hospital services are falling,” Desai said.
On Wall Street, U.S. markets plunged in response to the report. The tech-heavy Nasdaq fell 1.4%, the Dow Jones Industrial Average fell 0.6% and the S&P 500 fell 0.8% in intraday trading.
The consumer price index report comes as Federal Reserve Chairman Jerome Powell’s term at the helm of the central bank ends this week. Powell’s successor will be Kevin Warsh, who is expected to be confirmed by the Senate.
Trump has been calling for interest rate cuts since he took office for his second term, but the Fed is expected to keep rates unchanged for the rest of the year as inflation rises and the job market stabilizes.
“A strong economy and strong inflation will likely keep the Fed on hold for an extended period of time. We now expect the next rate cut to be in December rather than June,” Michael Pearce, chief U.S. economist at Oxford Economics, said in a note Tuesday.
Last month, the central bank decided to keep the benchmark interest rate at 3.5% to 3.75%. CME FedWatch, which tracks potential monetary policy decisions, says there is a 97% chance that interest rates will be left unchanged at the central bank’s next policy meeting.
