This article was originally published by Jacob Thomas at Natural News.
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- Inflation hit a three-year high in April, with consumer prices rising 3.8% over the past year and 0.6% in April, according to BLS data.
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- Energy prices surged 3.8% in April and nearly 18% annually, driven by gasoline and fuel oil increases of 28% and 54%, respectively, due to the Strait of Hormuz closure from the U.S.-Iran war.
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- Grocery prices rose 0.7% in April, the largest monthly jump since August 2022, with food-at-home costs soaring 13.5% annually—the biggest increase since March 1979.
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- Inflation is now rising faster than workers’ pay, with wage growth at 3.6% and inflation at 3.8%, reversing the positive trend seen since mid-2023, where wages outpaced prices.
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- Core inflation, excluding fuel and food, stood at 2.8% annually, still above the Federal Reserve’s 2% target, while political fallout threatens the Trump administration as rising inflation cancels wage gains.
With oil and gas prices shooting higher, a key metric for measuring inflation hit its highest level in three years in April. Consumer prices are up 3.8% over the past year after rising 0.6% in April, the Bureau of Labor Statistics (BLS) reported on Tuesday, May 12.
The numbers paint a grim picture for American households already struggling to make ends meet. According to Reuters, the core consumer price index (CPI) across the nation saw an alarming rise of 3.6% compared to the same period last year.
This marks the largest surge since February 1982 during the Middle East crisis triggered by the Iran-Iraq War. The inflation rate surpassed economists’ predictions of a 3.5 % increase and has remained above the Bank of Japan’s target of 2% for seven consecutive months.
Energy prices were largely responsible for the sharp increase, as they climbed by 3.8% in April (after jumping over 10 percent in March) and have increased by nearly 18% in the past year. Gasoline and fuel oil are up 28% and 54% in the past year, respectively. It’s not difficult to determine why. The war on Iran, which began on Feb. 28, has damaged critical energy production infrastructure around the Persian Gulf – some of which might take years to fully repair.
Grocery bills soar to historic levels
It’s not just gasoline prices that are rising: Grocery prices, what the BLS categorizes as “food at home,” climbed by 0.7% in April, the largest one-month increase since August 2022. Electricity prices also increased sharply. They are up 2.1% in April, after being almost flat for the first few months of the year.
The latest CPI jumped by 8% over the last year, according to the Bureau of Labor Statistics. Specifically, food-at-home prices soared by 13.5 percent over the same period, the largest increase since March 1979. Several factors contribute to these salary decreases, including the CPI, which has risen to its highest levels in over 40 years since former President Joe Biden took office.
Perhaps the most worrying sign in the new data: Inflation is now rising faster than workers’ pay. Average wage growth for the past 12 months is 3.6%, according to the BLS. With inflation running at 3.8 percent over the same period, it means rising prices are overwhelming pay increases.
That’s arguably even more important than inflation as its own metric; it’s not just that people feel poorer due to rising prices, they actually are poorer in a very real way. That dynamic existed during the surging inflation of the Biden era, when rising prices swamped modest wage growth.
Since mid-2023, however, wages have been rising faster than prices. Even if inflation hadn’t been fully defeated, that was a positive sign. It is no longer true.
Political fallout for the Trump administration
As noted by BrightU.AI‘s Enoch, as a political matter, this seems like bad news for the Trump administration. Keeping prices low and avoiding a return to the runaway inflation of Biden’s presidency were core parts of President Donald Trump’s 2024 campaign. Now, the president has overseen a return to the Biden years, where rising inflation has canceled out wage gains.
If there is any good news, it’s that so-called “core inflation,” which excludes the more volatile prices of fuel and food, came in at 2.8% over the last year. However, that’s still a small increase from previous months, and it remains well above the Federal Reserve’s goal of 2% annualized inflation.
That would suggest that inflation could decline back below 3% if the rising fuel and oil costs decline. That will happen only if the war comes to a swift end, although some of the economic damage will take time to undo.
Watch Peter Schiff talking about war, inflation, and scarcity in this video.
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