The Consumer Price Index is widely expected to show inflation rising to a nearly three-year high when April’s data is released Tuesday morning. A Dow Jones survey of economists projects annual inflation of about 3.8%, reflecting a 0.6 percentage-point month-to-month increase from March to April.
That expected rise follows an even larger 0.9% month-to-month jump from February to March, the biggest single-month increase since 2022. Economists say the broad economic fallout from the Iran war — including higher oil prices and supply disruptions — has been a major driver of the recent price acceleration.
As inflation picks up, it is beginning to erode real wages. Wage growth has slowed over the past two years, from roughly 4% in November to about 3.4% in March. If April’s inflation number matches forecasts, inflation would exceed wage gains for the first time since 2023, intensifying affordability pressures for households.
Core inflation, which strips out volatile food and energy costs and is the Federal Reserve’s preferred signal for underlying price trends, is expected to rise by 0.3% in April. Analysts warn that higher energy costs could take additional months to fully filter into prices of core goods.
Goldman Sachs highlighted strong travel-services inflation this month, noting some passthrough from recent oil-price increases tied to the conflict. Goldman economists forecast a roughly 3% increase in airfares and expect recent tariff policy to modestly lift prices in the near term.
Several economists say the recent surge in gasoline prices may not yet have fully fed through to consumer prices. Citigroup noted that energy-driven effects on core goods are likely to emerge only after a lag of several months.
Other data points add complexity to the outlook. The Bureau of Labor Statistics reported the U.S. economy added 115,000 jobs in April, exceeding expectations. The Fed’s favored inflation gauge, the personal consumption expenditures (PCE) index, rose 0.3% in March, bringing it to its highest level since late 2023.
Oil prices have moderated somewhat from earlier spikes; as of early Tuesday, U.S. crude was trading near $100 per barrel after briefly topping $120 earlier in the conflict. Meanwhile, U.S. stock indexes have continued to climb to record highs, leaving Wall Street analysts debating why markets have rallied even as oil and inflation signals point to rising risks.
The Iran war remains a key uncertainty shaping inflation and the broader economic outlook. At the pump, the national average price for a gallon of gasoline was about $4.52 as of Monday — just four cents shy of this year’s high — underscoring how energy costs are keeping pressure on household budgets.