US inflation rises to three-year high amid tensions with Iran | Stories of Ascension

The increase in fuel prices led to a 5.5 percent increase in fuel prices in April.

U.S. inflation hit its highest level in three years as the ongoing U.S.-Israel war over Iran pushed up energy prices.

Personal spending – the US Federal Reserve’s preferred measure of inflation – rose 3.8 percent last year in April, following a 3.5 percent increase in March, according to a report by the Commerce Department’s Bureau of Economic Analysis released Thursday.

On a monthly basis, PCE (Personal Consumption Expenditures Price Index) rose by 0.4 percent in April following an increase of 0.7 percent in March.

Overall, commodity prices rose by 0.7 percent. The biggest jump was at the oil pumps, with prices rising 5.5 percent as tensions with Iran roiled energy markets around the world. The average price of a gallon of petrol (3.78 liters) is $ 4.42, from $ 4.17 this time last month, and from $ 2.98 per gallon on February 28, when the US and Israel defeated Iran.

Food prices also rose 0.5 percent, marking the biggest monthly price increase since November 2022.

Housing and utility spending also rose by 0.6 percent. Consumer spending also rose 0.5 percent following 1 percent in March. Many consumers are also using their savings, and savings decreased by 2.6 percent last month.

The Federal Reserve’s problems

The rise in inflation puts the Federal Reserve ahead of the central bank’s first meeting under the new administration Chairman Kevin Warshwhich is scheduled for June 16-17. The central bank is tracking PCE inflation as it tries to meet its 2 percent target.

“Inflation is becoming more difficult for the Fed,” Olu Sonola, head of US finance at Fitch Ratings, told Reuters. “Price pressure will continue for the next few months, and while the Fed may not be able to fix the problem, it cannot ignore the underlying causes of inflation.”

It is expected that the central bank will maintain 3.50-3.75 percent until 2027. The latest analysis of JPMorgan Chase said that the rates will be stable until the middle of 2027, when a rate hike instead of a cut is expected.

This is reflected in the central bank’s minutes from its April 28-29 meeting, which showed policymakers leaning towards raising rates.

US markets rise despite report showing rising inflation. The Nasdaq is up 0.6 percent and the S&P 500 is up 0.5 percent, while the Dow Jones Industrial Average is almost flat — up just 0.05 percent in midday trading.

The White House did not respond to Al Jazeera’s request for comment.