The Consumer Price Index (CPI) in the United States reached its highest level on a year-over-year basis in April since 2023. While the spike in gasoline prices (+28.4%) remains the main driver, the contagion is spreading to food and services, now weighing on households’ real purchasing power.
Inflation continues to rise in the United States. It surged by 3.8% year-over-year in April, according to official data released on Tuesday. This is the highest rate since May 2023. In comparison, the Consumer Price Index (CPI) increased by 3.3% in March and 2.4% in February.
While gasoline prices saw a significant increase of 28.4% year-over-year, price hikes have also spread across the economy, from groceries to rents. The surge in gasoline prices doesn’t just impact gas stations but also affects farmers, transporters, and industrial sectors, leading to cost increases passed on to consumers.
“The food prices continue to rise, with food inflation reaching multi-year highs, while underlying services – including housing and healthcare – have recorded their strongest growth since September. Inflationary pressures are not limited to the pump; they are evident in the overall household budget,” observed Bret Kenwell, an analyst of American markets for eToro.
“For the first time in three years, inflation is outpacing wage increases. This is a tough blow for middle and working-class households,” noted Heather Long, an economist at Navy Federal Credit Union.
As tensions persist in the Middle East due to Israeli-American strikes on Iran, the oil prices remain above $100 per barrel with ordinary gasoline costing around $4.50 in the US, up from about $3 pre-war, according to the American Automobile Association (AAA).
Approaching the midterm elections, the Trump administration assures that economic disruptions are temporary for Americans. President Trump had prioritized restoring purchasing power during his tenure.
The release of a consumer sentiment gauge on Friday also unsettled the American administration. The University of Michigan’s index, a key reference, hit a record low since the survey’s inception in November 1952. Despite this, the US maintained full employment in April with stable unemployment at 4.3%, as expected, and 115,000 jobs created, surpassing expectations, according to official data released on Friday.
