US inflation accelerated in April to its highest level in three years, according to official economic data released on Thursday.
The Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge, rose sharply, driven mainly by higher gasoline and energy prices.
The latest figures underscore ongoing price pressures amid geopolitical tensions and supply chain disruptions.
PCE index rises to 3.8 percent
Data from the US Bureau of Economic Analysis showed that the annual Personal Consumption Expenditures (PCE) price index increased to 3.8 percent in April, up from 3.5 percent in March.
The rise matched economists’ expectations and marked the fastest annual increase since May 2023.
The PCE index is considered the primary benchmark used by the Federal Reserve to guide monetary policy and interest rate decisions.
Core inflation remains stable
Core inflation, which excludes volatile food and energy prices, held steady at 3.3 percent on an annual basis in April.
This reading was also in line with forecasts, suggesting that much of the recent inflation surge was concentrated in the energy sector.
Energy prices and Middle East tensions
The increase in US inflation was largely attributed to higher energy costs, particularly gasoline.
According to the data, gasoline prices have risen by more than 50 percent since the outbreak of conflict in the Middle East at the end of February.
The conflict has disrupted shipping through the Strait of Hormuz, pushing up global energy prices and intensifying pressure on supply chains. Shortages of key commodities, including fertilizers, aluminum and various consumer goods, have further contributed to inflationary pressures.
Implications for Federal Reserve policy
The latest data strengthened expectations among economists that the Federal Reserve may keep interest rates unchanged until late next year.
Persistent price pressures, especially in energy markets, could delay any shift toward monetary easing as policymakers seek to bring inflation closer to their long-term target.
Key figures at a glance
Annual PCE inflation at 3.8 percent in April
Core inflation stable at 3.3 percent
Gasoline prices up more than 50 percent since late February
Highest annual inflation reading since May 2023
Conclusion:
The rise in US inflation to a three‑year high reflects mounting energy-driven price pressures and broader global supply challenges. As the Federal Reserve assesses its next steps, markets are closely watching inflation trends and geopolitical developments that may shape future monetary policy.
