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.
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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.
As inflation continues to accelerate, it’s 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.
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.
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.