The War Comes for Your Wallet: Inflation Hits 3.8%, Highest Level in 3 Years

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 percent over the past year after rising 0.6 percent in April, the Bureau of Labor Statistics reported on Tuesday morning.

Energy prices were largely responsible for the sharp increase, as they climbed by 3.8 percent in April (after jumping over 10 percent in March) and have increased by nearly 18 percent in the past year. Gasoline and fuel oil are up 28 percent and 54 percent in the past year, respectively.

It’s not difficult to determine why.

The Strait of Hormuz, which carries about a quarter of the world’s oil production, has been closed since March 2 due to the ongoing war between the United States and Iran. The war has also damaged critical energy production infrastructure around the Persian Gulf, some of which might take years to fully repair.

It’s not just gasoline prices that are rising. Grocery prices—what the BLS categorizes as “food at home”—climbed by 0.7 percent in April, the largest one-month increase since August 2022. Electricity prices also increased sharply. They are up 2.1 percent in April, after being almost flat for the first few months of the year.

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 percent, 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.

JUST IN: Inflation is now eating up all wage gains for the first time in about three years. This is painful for Americans and a true financial squeeze.

CPI Inflation in past year: 3.8%
Wage gains: in past year: 3.6% pic.twitter.com/dNa5VvS5DE

— Heather Long (@byHeatherLong) May 12, 2026

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 Joe Biden’s presidency were core parts of 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 in Tuesday’s report, it’s that so-called “core inflation”—which excludes the more volatile prices of fuel and food—came in at 2.8 percent 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 percent annualized inflation.

That would suggest that inflation could decline back below 3 percent 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.

Trump can have a war with Iran, or he can tame inflation. It’s obvious now that he can’t have both.