U.S. Inflation Seen Hitting 3.8% in April as Iran War Lifts Gasoline Prices
Updated
Updated · MarketWatch · May 11
U.S. Inflation Seen Hitting 3.8% in April as Iran War Lifts Gasoline Prices
2 articles · Updated · MarketWatch · May 11
April consumer inflation is forecast to jump 0.6%, lifting the annual CPI rate to 3.8% from 3.3%—the highest since spring 2023.
Gasoline prices tied to the Iran war are driving the spike, and economists say inflation could top 4% in May if hostilities persist and the Strait of Hormuz stays disrupted.
Core CPI, which strips out food and energy, is seen rising a milder 0.3% in April, with the 12-month core rate edging up to 2.7%, suggesting broader price contagion remains limited for now.
Wholesale pressures are still building: April PPI is expected to rise 0.6%, pushing annual producer inflation to 4.8% and signaling more pipeline pressure on consumer prices.
That rebound in headline inflation could keep the Federal Reserve from cutting rates aggressively, prolonging high borrowing costs even if an eventual end to the conflict cools oil prices.
As an oil shock hits consumers, is the AI boom creating a stealthier inflation threat for the Federal Reserve?
Beyond the gas pump, how is the Iran conflict threatening to trigger a massive spike in your family's grocery bills?
The 2026 Iran War Oil Shock: Economic Fallout, Inflation Surge, and Global Stagflation Risks
Overview
In March and April 2026, the Iran War and the closure of the Strait of Hormuz triggered a global oil supply shock, leading to surging prices and inflation, especially in the United States. Despite its own oil production, the U.S. economy was hit harder than other major economies because it relies more on oil for each unit of economic output. As a result, American consumers and businesses faced noticeable cost increases. This heightened vulnerability highlights how global energy disruptions can quickly translate into domestic economic challenges, with the U.S. experiencing more severe immediate impacts than its peers.