US faces rising cost of Iran war driving up energy prices, rising prices | Stories of Ascension

Consumer prices in the United States rose for the second month in a row, marking the largest annual increase in nearly three years. when electricity prices went up behind the US-Israel war on Iran.

US consumer prices rose 0.6 percent in April after a 0.9 percent increase in March, according to the Bureau of Labor Statistics’ Consumer Price Index (CPI) report published on Tuesday.

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Prices are up 3.8 percent year over year, which is the biggest jump since May 2023. Prices rose 3.3 percent in March.

The increase was driven by a rise in energy prices, including fuel or oil prices, which rose by 5.4 percent.

Annually, the increase is large. Electricity prices are up 17.9 percent over the past 12 months, while fuel prices are up 28.4 percent compared to this time last year.

The average price of a gallon (3.78 liters) of gasoline is $4.50, according to the American Automobile Association (AAA), which tracks fuel prices daily. The average price was $2.98 when the US and Israel hit Iran for the first time on February 28.

“The increase in electricity prices compared to non-electricity prices is more visible in air travel, which airlines have to raise to meet the increase in jet fuel prices,” Bernard Yaros, a US economist at Oxford Economics, said in a report provided to Al Jazeera.

Air travel was up 2.8 percent from a month earlier, driven by rising jet fuel costs that have put a strain on airlines, including Spirit Airlines, which went out of business earlier this month after 34 years in business. The airline said it had raised fuel prices due to “recent political events” in court filings.

‘I don’t think about American money’

On Tuesday, US President Donald Trump was asked if the economic crisis facing the American people is an incentive to make a deal with Iran. The president replied: “Not at all.”

“The only thing that matters when I’m talking about Iran: They can’t have a nuclear weapon. I’m not thinking about the American economy. I’m not thinking about anyone. I’m thinking about one thing: We can’t allow Iran to have nuclear weapons,” Trump told reporters.

In a statement to Al Jazeera, the White House said the rate cut would be temporary.

“President Trump has been very clear about the immediate disruption caused by Operation Epic Fury,” White House spokesman Kush Desai told Al Jazeera.

Economists say a conflict with Iran will push prices higher.

“We are still looking for CPI inflation to peak this quarter at the slowest pace during the pandemic. Although the core CPI will remain high this year, it is unlikely to move much from here,” said Yaros.

Grocery prices go up

Grocery prices are also on the rise, up 0.7 percent. Prices of meat, poultry, fish and eggs increased by 2.7 percent compared to last month. Cattle prices rose 2.7 percent.

The price of fruits and vegetables increased by 1.8 percent. Compared to this time last year, goods including tomatoes jumped by almost 40 percent, and more than 15 percent since this time last month alone.

Coffee prices were up 18.5 percent compared to this time last year, while they were up 2 percent compared to last month.

“Every day the war goes on, prices go up and they will stay there for a few months after it ends,” Alex Jacquez, a former member of the White House National Economic Council under former US President Joe Biden, said in a statement given to Al Jazeera.

However, there was a decrease of 39 percent in the price of eggs compared to this time last year, the number of the White House was mentioned in a post on the social network X. This price, however, has passed month by month by 1.5 percent.

The White House also reported a 12 percent decline in smartphone prices since this time last year, although prices have increased by one percent since this time last month.

Cellphones were not exempted from tariffs imposed by US President Donald Trump last year.

Other price-sensitive sectors saw price increases, with the price of clothing rising by 0.6 percent, as did the cost of all electricity. Apartments and toys jumped 0.8 percent.

On the other hand, health care costs decreased. Overall, drug prices were down 0.4 percent from this time last month and down 0.5 percent from this time last year. Prescription drug prices remained stable month-over-month and decreased by 0.9 percent.

“The CPI report for April confirms, however, that President Trump’s long-term economic policy continues despite these setbacks: drug and hospital prices are falling due to the President’s Most Popular-Country and cost-cutting measures,” said Desai.

On Wall Street, US markets fell on the heels of the report. The tech-heavy Nasdaq is down 1.4 percent, the Dow Jones Industrial Average is down 0.6 percent, and the S&P 500 is 0.8 percent lower in afternoon trading.

The consumer price report comes as Chairman Jerome Powell’s term at the helm of the US Federal Reserve ends this week. Powell should be replaced by Kevin Warsh, who is expected to be confirmed by the Senate.

With inflation rising and the labor market improving, the Fed is expected to keep rates unchanged for the rest of the year despite Trump’s desire to keep rates low since taking office.

“A strong economy and strong inflation will keep the Federal Reserve on its toes — we now expect a rate cut in December, not June,” Michael Pearce, US economist at Oxford Economics, said on Tuesday.

Last month, the central bank voted to keep its holdings interest rate between 3.5 – 3.75 percent. CME FedWatch, which monitors the probability of monetary policy decisions, says there is a 97 percent chance that rates will remain unchanged at the central bank’s next meeting.