U.S. consumer prices climbed 3.8% in April from a year earlier, reflecting a broad acceleration in inflation as the 10-week conflict with Iran continued to push energy costs higher. The Labor Department reported Tuesday that the consumer price index increased 0.6% on a month-to-month basis, underscoring how sustained geopolitical disruption at the pump and at the wellhead is pressing directly into household budgets across the country.
The month-over-month gain marked a slight deceleration from March’s 0.9% monthly rise, but the April data still ran well above economists’ forecasts. Energy prices served as the primary upward driver, with gasoline costs climbing 5.4% during the month alone and rising more than 28% compared to April 2025. According to motor club AAA, the national average price per gallon has surged past $4.50, representing a roughly 44% increase over the past year.
Wholesale inflation registered an equally sharp acceleration, signaling that companies are absorbing higher input costs and preparing to pass them along to shoppers. The Labor Department’s producer price index jumped 1.4% in April, the largest monthly gain since March 2022. Year-over-year producer prices rose 6%, the steepest climb since December 2022. Within that wholesale basket, energy costs climbed 7.8% from March and 22.7% annually, while gasoline jumped 15.6% month-over-month and diesel — the lifeblood of domestic freight and retail supply chains — surged 12.6%. Even after stripping out volatile food and energy components, core producer prices rose 1% in April and sat 5.2% higher than a year prior.
The labor market showed signs of friction despite historically low joblessness. Applications for unemployment benefits rose by 12,000 to 211,000 for the week ending May 9, the Labor Department reported Thursday. The figure came in slightly above the 207,000 analysts surveyed by FactSet had anticipated. Weekly jobless filings remain near multi-decade lows, but the underlying labor dynamic has settled into what economists describe as a “low-hire, low-fire” environment. That dynamic has kept the national unemployment rate anchored at a low 4.3%, even as displaced workers report longer search times and fewer openings matching their skill sets.
Consumer spending cooled in tandem with the fuel-price shock. Commerce Department data released Thursday showed retail sales rose 0.5% in April, a respectable figure in isolation but a marked slowdown from March’s 1.6% surge. Excluding gasoline station purchases, April retail sales grew just 0.3%, less than half the 0.7% pace recorded the prior month. The pullback was concentrated in nonessential categories, as shoppers with tighter fuel budgets trimmed spending on apparel, home furnishings, and discretionary goods.
The housing market remained sluggish during what is traditionally its busiest selling season. Existing home sales were essentially flat in April, edging up just 0.2% from March to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said Monday. The April figure matched sales from April 2025 and fell short of the roughly 4.12 million annual pace economists had projected. Transaction volumes have hovered near a 4 million annual rate consistently since 2023, trading significantly below the historical average of roughly 5.2 million units per year.
Borrowing costs offered a slight reprieve for prospective buyers and refinancing homeowners. The average rate on a 30-year fixed mortgage dipped to 6.36% this week, down marginally from 6.37% the previous week, according to mortgage buyer Freddie Mac. A year ago, the benchmark rate averaged 6.81%. The average 15-year fixed rate, heavily utilized by homeowners seeking to refinance, also eased to 5.71% from 5.72% a week earlier, down from 5.92% in the same period last year.
Financial markets reacted to the inflation data with a broad pullback. U.S. equities slid from record highs on Friday, joining a worldwide stock market drop as higher oil prices rippled through the bond market. Shares that had rallied sharply earlier in the week on sustained enthusiasm around artificial-intelligence technology led the Friday decline, as investors recalibrated valuations in light of hotter-than-expected price pressures and the economic drag of the ongoing Iran conflict.