US inflation jumps to 3.8pc as energy costs surge from Iran war

US prices rose in April at their fastest rate since May 2023 as the impact of the war in Iran was increasingly felt by consumers.

A jump in the cost of gasoline and groceries pushed the consumer price index (CPI), the amount prices jumped by in the past 12 months, to 3.8%.

It is the highest level since inflation hit 4% three years ago. The Bureau of Labor Statistics (BLS) said almost half of the rise was driven by surging energy costs, while housing and food costs also contributed.

The US-Israel war in Iran, and the resulting effective closure of the key Strait of Hormuz shipping lane, has caused the price of a gallon of gas in the US to surge.

The national average price for a gallon of unleaded is at its highest level since July 2022, at $4.50 (£3.33), according to data from the AAA motoring group.

The rise in April’s inflation figure, from 3.3% in March, makes it increasingly unlikely the Federal Reserve will cut interest rates this year.

It also poses a challenge for US President Donald Trump and the Republicans ahead of  November’s midterm elections, after Trump’s 2024 re-election campaign focused largely on his plans to cut inflation.