AT A GLANCE
- Inflation rose to 3.8% in April, the highest level in nearly three years.
- Consumer prices increased 0.6% from the previous month.
- Energy costs rose 3.8% in April and accounted for more than 40% of the monthly increase.
- The average price of a gallon of gas reached $4.50 as oil prices climbed more than 70% since the start of the year.
Increased Energy Costs Are “Accounting For Over Forty Percent Of The Monthly All Items Increase,” Said The Bureau Of Labor Statistics
Inflation surged to 3.8% in April, its highest level in nearly three years, according to data released Tuesday, as the war in Iran causes a ripple effect across the economy and energy prices surge.
The overall rise in inflation was in line with what was expected by economists. On a month over month basis, inflation rose 0.6%.
Core inflation, which excludes food and energy costs, also rose 0.4% from the month prior, the Bureau of Labor Statistics said. That rise was higher than what had been expected by economists.
Inflation Is Rising Faster Than Wage Growth
As inflation continues to accelerate, it is eating into Americans’ wages at a rapid clip.
The pace of wage gains has been slowing over the past two years. In November, wage growth continued to rise at a pace of almost 4%. By March, that had fallen to 3.4%.
April’s inflation rate is now rising faster than wages, which could exacerbate the affordability crisis that has already been gripping consumers.
Energy Prices Are Driving A Major Share Of The Increase
As of Tuesday morning, the price of oil had risen more than 70% since the start of the year and the average price of a gallon of gas was $4.50.
“The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all items increase,” the Bureau of Labor Statistics said in a statement.
Still, energy prices may not have yet fully hit prices.
“Energy costs likely would not start to feed through to core goods prices for at least a few more months,” Citigroup said in a note to clients on Monday.
Airfares And Apparel Also Rose In April
The Bureau of Labor Statistics also noted that other energy market linked prices rose in the month, including airfares and apparel.
Airfares alone rose 20% from a year ago.
