U.S. Inflation Hits 3.8% in April Amid Iran War, Gas and Food Prices Soar

The U.S. consumer price index rose 3.8% in April 2025 compared to the same month last year, marking the largest year-over-year increase in three years. This surge follows a 3.3% gain in March and reflects the economic impact of a 10-week war with Iran, which has driven up gasoline and food prices nationwide.

According to data released by the Labor Department on Tuesday, April prices climbed 0.6% from March. Gasoline prices alone jumped 5.4% month-over-month, contributing to a 28% annual increase. The AAA motor club reported the average price of a regular gallon of gasoline exceeded $4.50 on Tuesday, a 44% rise from the same time last year.

Excluding volatile food and energy costs, core consumer prices rose 0.4% from March and 2.8% year-over-year, suggesting the energy price shock has not yet broadly affected other goods. Grocery prices increased 0.7% from March to April, with meat prices rebounding after a slight decline the previous month.

Inflation remains a top concern for Americans already grappling with high living costs. The issue is expected to play a pivotal role in the upcoming November 3 elections, where voters will decide whether President Donald Trump’s Republican Party retains control of the U.S. Senate and House of Representatives.

“Inflation is the key drag on the U.S. economy now. There is a real financial squeeze underway. For the first time in three years, inflation is eating up all wage gains. This is a setback for middle-class and lower-income households, and they know it. They are having to cut back on spending and stretch every dollar.”

Heather Long, chief economist at Navy Federal Credit Union, emphasized the severity of the situation, noting that average hourly wages fell 0.3% from a year earlier after adjusting for inflation—the first year-over-year decline in three years.

Inflation had been steadily declining since peaking at 9.1% in June 2022, driven by post-COVID-19 supply chain disruptions and the Russian invasion of Ukraine. However, it has remained above the Federal Reserve’s 2% target. The situation escalated on February 28, 2025, when the U.S. and Israel launched attacks on Iran. In response, Tehran restricted access to the Gulf of Hormuz, a critical chokepoint for global oil and liquefied natural gas shipments, accounting for one-fifth of the world’s supply.

The conflict has sent oil and gasoline prices soaring, prompting the Federal Reserve to adopt a more cautious stance. Previously expected to cut interest rates in 2026, the Fed is now monitoring the conflict’s duration and potential spillover effects into broader inflation. Meanwhile, President Trump has criticized the Fed and its outgoing chair, Jerome Powell, for their handling of the economic fallout.