The April consumer price index was expected to show inflation climbing to a nearly three-year high when the cpi report was released Tuesday morning, with economists and analysts projecting a 3.8% annual rate. That would be up 0.6% from March and would mark the sharpest pace since inflation began easing from its 2022 peak.
The forecast also pointed to a 0.3% rise in core inflation, the measure Federal Reserve policymakers watch most closely because food and fuel prices can swing quickly. If the cpi report matched those projections, inflation in April would have moved above wage growth for the first time since 2023, a striking shift after pay gains had slowed from almost 4% in November to 3.4% by March.
The number mattered because the previous month already showed a sharp turn higher. Inflation rose 0.9% from February to March, the biggest month-to-month jump since 2022, and the April reading was expected to show whether that was a one-month burst or the start of a stickier pattern. The Bureau of Labor Statistics said last week that the U.S. economy added 115,000 jobs in April, while its preferred core inflation gauge, the personal consumption expenditures index, rose 0.3% in March to its highest level since late 2023.
Goldman Sachs economists Jessica Rindels and Ronnie Walker said on Monday they expected strong travel services inflation this month, partly because oil prices had surged since the U.S. and Israel went to war with Iran. They forecast a 3% increase in airfares and said President Donald Trump's tariffs were expected to keep affecting prices and modestly boost monthly inflation over the next few months. Citigroup economist Veronica Clark wrote that energy costs likely would not start to feed through to core goods prices for at least a few more months.
The pressure was showing up in energy markets before the data even arrived. Early Tuesday, U.S. crude oil was more than 3% higher at over $101 per barrel, after briefly surpassing $120 per barrel earlier in the Iran war. Stocks had climbed to record highs, leaving investors with a split screen of rising energy costs and a market that was still brushing off some of the economic strain. The cpi report is now the clearest test of whether those higher costs are beginning to land in the prices consumers actually pay.
