US inflation hits 3-year high as war on Iran and its chokehold on Hormuz drives up energy costs

Consumer inflation in the US hit a three-year high in April, with the economic fallout of US-Israeli war on Iran and Tehran’s retaliation rippling through the world’s largest economy.

The consumer price index (CPI) rose 3.8 percent year-on-year, up from March’s 3.3 percent figure, the US Bureau of Labor Statistics (BLS) said on Tuesday.

Affordability has been a key political concern for US President Donald Trump, and the stubbornly high prices — fuelled by energy costs and roiled supply chains due to the war as well as new US tariffs — will pile pressure on his Republican Party ahead of November’s mid-term elections.

The US-Israel war on Iran has engulfed the Middle East in violence since late February, with Iranian retaliatory action targeting Washington’s regional allies and virtually blocking the Strait of Hormuz.

Tehran has also rained missiles and drones on US-allied Gulf countries, shattering the oil-rich countries’ hard-earned reputation for stability.

Roughly a fifth of the world’s oil and natural gas passes through Hormuz under normal circumstances, and the blockade has sent worldwide energy prices surging.

In April, the US price index for energy rose 17.9 percent compared to a year ago, BLS data showed, by far the largest price jump for any category.

Food prices were up 3.2 percent in April over last year, the data showed, with groceries also rising at their highest rate since 2023.

Core consumer price index (CPI) inflation, which excludes volatile food and energy prices, came in at 2.8 percent year-on-year in April, up from 2.6 percent the month before.

‘Shock at the pump’

US consumers have been battered by years of higher-than-expected inflation, with policymakers struggling to achieve price stability more than five years after the pandemic began.

High fuel prices will be a core concern for voters. The average price of a gallon of regular gasoline has risen 51 percent since the start of the war, according to the AAA motor club.

Bernard Yaros, lead US economist at Oxford Economics, warned that high wholesale gasoline prices suggested that pump prices would again lift headline inflation next month.

“Consumers aren’t only facing sticker shock at the pump, but also with their utility bills, as electricity prices rose sharply last month,” he said.