WASHINGTON — Prices charged by U.S. producers shot up at the fastest pace in more than three years in April, the Labor Department reported Wednesday, as the closure of the Strait of Hormuz pushed energy costs sharply higher and forced a growing number of companies to signal that they will pass the expense on to consumers.
The department’s producer price index — a gauge of inflation before it reaches retail counters — rose 1.4% from March, the biggest one-month advance in more than four years. Measured from April 2025, the index was up 6%, well above what forecasters had expected.
Energy markets bore the clearest imprint of the supply shock that began Feb. 28 when Iran closed the strait after U.S. and Israeli airstrikes. Wholesale energy prices climbed 7.8% from March, gasoline surged 15.6% and diesel — the fuel that powers most freight movement — jumped 12.6%, the report showed. The national average for a gallon of regular gasoline ticked up again overnight to $4.51, according to AAA.
The International Energy Agency sharpened its warning the same day, saying that “mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace.” Since February, worldwide oil supply has shrunk by 12.8 million barrels a day in what the IEA called “an unprecedented supply shock.” Roughly one-fifth of the world’s oil and liquefied natural gas normally moves through the strait.
The cost ripple is already hitting shipping and store shelves. The Labor Department’s data showed that truck-freight costs shot up more than 8% from March and that air-cargo rates rose 3.6%. Grace Zwemmer, U.S. economist at Oxford Economics, noted that food prices, which had fallen 0.6% in March, edged up 0.2% in April and “may face upward pressure from higher fuel prices the longer the war persists.”
For households, the squeeze is compounding an affordability crisis that has already become a central issue ahead of November’s midterm elections, when control of Congress is at stake. The consumer price index, a separate gauge published earlier this week, rose 3.8% in April from a year ago — the largest 12-month increase in more than three years — with increases showing up in everything from airfares and baggage fees to soap and toothpaste.
Companies brace for more increases
The strain is remaking pricing decisions inside some of the country’s best-known companies. Walmart, a retailer built on low prices, already implemented rare price hikes last year as President Donald Trump’s tariffs took effect, and the surge in energy costs is intensifying the pressure to act again.
Whirlpool, which manufactures KitchenAid and Maytag appliances, reported this month that its revenue dropped nearly 10% in its most recent quarter and said the war had caused a “recession-level industry decline” that has sapped consumer confidence. The company pushed through a 10% price increase in April — its largest in a decade — and disclosed that another 4% increase is coming in July.
“The results are so far above expectations that this update will set off alarm bells in the financial markets, too,” wrote Carl Weinberg, chief economist at High Frequency Economics.
Even excluding the volatile food and energy categories, core producer prices rose 1% from March and 5.2% from April 2025, suggesting that the inflationary pressure is beginning to spread beyond the direct effects of the fuel shock.
The Fed’s dilemma
The snapshot arrives at an acutely difficult moment for the Federal Reserve. Before the war, policymakers had signaled that 2026 would bring a cut to the central bank’s benchmark interest rate, which had already been declining. Those plans are now frozen.
The Fed’s outgoing chair, Jerome Powell, has come under sustained attack from Trump for refusing to slash rates to stimulate the economy. On Wednesday, the Senate confirmed Kevin Warsh — Trump’s handpicked successor — as the next Fed chair. It remains unclear whether Warsh will pursue lower rates amid the uncertainty created by the war even if he is inclined to do so, or whether he could convince the rest of the rate-setting committee to go along.
For now, the committee appears to be waiting to see how long the conflict lasts and whether higher energy prices seed a broader inflationary outbreak. The answer, the data suggest, may already be arriving.