US inflation hits 3.8% as Iran war drives energy prices higher

Consumer prices rose to their highest level since May 2023, with surging energy costs tied directly to the conflict in Iran pushing the annual inflation rate to 3.8%.

US inflation climbed to 3.8%, the highest reading since May 2023.
Energy costs are the primary driver, spiking as the Iran war disrupts oil supply chains.
The jump puts fresh pressure on household budgets already strained by years of elevated prices.
The Federal Reserve faces renewed scrutiny over its rate path after the hotter-than-expected figure.
Further CPI data is due next month, with Fed policymakers meeting before the next release.

US inflation surged to 3.8% in the latest reading, the highest level since May 2023, as energy prices driven up by the Iran war tore through the broader economy, according to new figures reviewed by the News.

The jump marks a sharp reversal from the slow disinflation trend the Federal Reserve had been counting on, with fuel and utility costs leading the climb.

Households are absorbing higher prices at the pump and on energy bills as global oil markets react to the ongoing conflict, sources told the News.

The 3.8% annual rate exceeded analyst expectations and puts the Fed in a bind: cutting rates risks inflaming prices further, while holding them squeezes borrowers already under strain.

Fed Chair Jerome Powell is scheduled to address reporters following the central bank’s next policy meeting. Markets are now pricing in a longer hold on interest rates than they were before the latest data dropped.