April’s 3.8% year-on-year PCE inflation rise marks the fastest pace since May 2023, driven by higher energy costs and supply disruptions.
US inflation accelerated to 3.8% year-on-year in April, the highest since May 2023, as energy prices surged amid geopolitical tensions. The personal consumption expenditures price index rose 0.4% month-on-month, following a 0.7% gain in March.
Economists had expected a 3.8% annual increase, matching the reported figure. The conflict in the Middle East disrupted shipping routes, pushing gasoline prices up 12.3% in April and over 50% since late February. Supply chain strains also lifted costs for goods like fertilizers and aluminum.
The data reinforces expectations that the Federal Reserve may keep interest rates elevated into next year. Inflation had already been rising before the conflict, partly due to existing trade tariffs.