--- title: "Hotter Than Expected! US April CPI Rises 3.8% Year-on-Year, Hitting a Three-Year High; Core CPI Inflation Widens to 2.8%" type: "News" locale: "en" url: "https://longbridge.com/en/news/286103075.md" description: "The impact of the Iran war is permeating the price system through energy, airfare, and transportation costs. Memory chip costs are spiraling out of control due to the intensifying \"AI race.\" Additionally, the BLS made a one-time correction to rent and housing data distortions caused by the Government Shutdown last October, which also constituted a technical disturbance to this period's data" datetime: "2026-05-12T13:07:46.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286103075.md) - [en](https://longbridge.com/en/news/286103075.md) - [zh-HK](https://longbridge.com/zh-HK/news/286103075.md) --- # Hotter Than Expected! US April CPI Rises 3.8% Year-on-Year, Hitting a Three-Year High; Core CPI Inflation Widens to 2.8% The dual impact of war shocks and rising memory costs has reignited inflationary pressures in the United States, further squeezing the Federal Reserve's room for interest rate cuts this year. According to data released by the US Bureau of Labor Statistics (BLS) on Tuesday, the Consumer Price Index (CPI) rose 3.8% year-on-year in April, higher than the market expectation of 3.7%, marking the highest level since May 2023. The month-on-month increase was 0.6%, in line with expectations, but down from the previous value of 0.9%. The Iran war drove gasoline prices to continue climbing, serving as the main driver of this round of accelerated inflation. Core CPI, excluding food and energy, rose 2.8% year-on-year, exceeding the expected 2.7% and hitting the highest level since September 2025; core CPI rose 0.4% month-on-month, also higher than the expected 0.3% and the previous value of 0.2%. Behind the data exceeding expectations lies a confluence of multiple factors: the impact of the Iran war is permeating the price system through energy, airfare, and transportation costs; memory chip costs are spiraling out of control due to the intensifying "AI race"; additionally, the BLS made a one-time correction to rent and housing data distortions caused by the Government Shutdown last October, which also constituted a technical disturbance to this period's data. Notably, although inflation data has heated up, the stock market has not shown a significant reaction so far, but trends in the bond market may be subtly hinting at greater risks. ## Energy Shocks Dominate Gains, Food and Services Affected The Iran war is the core driver of this acceleration in inflation. Gasoline prices have surged significantly for two consecutive months, becoming the largest component pulling up the overall CPI. According to Bloomberg data, from a short-term annualized perspective, the contribution of the energy component is particularly prominent. Rising energy prices triggered by the war are transmitting to broader consumption sectors through multiple channels. Airfare is one of the most typical examples: airfare prices rose 2.8% month-on-month in April, as airlines raised ticket and baggage fees and cut capacity against the backdrop of soaring aviation fuel costs; hotel prices rose 2.8% month-on-month, marking the largest monthly increase since 2024; overall service costs, excluding energy and housing, rose 0.5% month-on-month. Food prices have also seen a significant upward trend. Economists point out that rising fertilizer prices are expected to further push up grocery bills, while high oil prices will also spread to more goods and services through rising transportation costs. ## Statistical Disturbances in Housing Data, Special Factors Behind High Core Inflation The rise in core CPI in April partly stems from one-off statistical factors. Housing costs rose 0.6% month-on-month, the largest single-month increase in over two years, but this was largely distorted by the lingering effects of the 2025 Government Shutdown. The BLS's rent data is based on samples collected on a rolling six-month basis. Due to the inability to collect data normally during the Government Shutdown last year, prices for relevant units were held unchanged in October of last year. When these units were re-priced in April this year, they captured about a year's worth of price increases in one go, making the month-on-month rent increase for that month appear to be about twice the normal level. Core goods prices (excluding food and energy) remained flat overall, with declining new car prices providing a hedge. Among components sensitive to tariffs, price increases for clothing and toys narrowed compared to March; used car prices remained flat. The market had previously focused on whether retailers had completed the pass-through of Trump's tariff costs; current data does not yet show obvious signs of concentrated transmission, but if energy prices remain high, the risk of commodity inflation rising again in the second half of the year cannot be ignored. ## Sustainability of Inflation in Question, Market Reaction Calm Although the April data was generally hot, there is still divergence in the market regarding the sustainability of this inflation rebound. Judging from recent oil price trends, as oil prices stabilize or even fall slightly, the impact of the energy component on the CPI may have nearly peaked. The market's current focus is on whether core inflation can maintain a mild trend outside of energy shocks. Core CPI in March was lower than expected, indicating that the war's impact had not yet widely permeated the core price system. Although April's core data exceeded expectations, some factors were one-off in nature. Investors tend to "look through" short-term, energy-driven price pressures, focusing instead on the medium-term trend of the core component. The bond market has issued more cautious signals regarding the inflation outlook, while the stock market's reaction to fears of a recurrence of 1970s-style inflation has been relatively restrained. Consumer confidence has hit rock bottom, and the potential dampening effect of sustained upward price pressure on consumer spending will be a key variable in assessing economic prospects. ### Related Stocks - [ZIVB.US](https://longbridge.com/en/quote/ZIVB.US.md) - [VFH.US](https://longbridge.com/en/quote/VFH.US.md) - [XLF.US](https://longbridge.com/en/quote/XLF.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [.NDX.US](https://longbridge.com/en/quote/.NDX.US.md) ## Related News & Research - [US adds 115,000 jobs in April despite concerns over Iran war](https://longbridge.com/en/news/285813993.md) - [Inflation jumps to 3-year high, CPI shows, and that's not the end of it](https://longbridge.com/en/news/286100477.md) - [April US inflation seen hitting 3.7% on energy, rents](https://longbridge.com/en/news/286035690.md) - [CPI inflation overshoots as oil prices, rates test S&P 500 (live coverage)](https://longbridge.com/en/news/286105940.md) - [INSTANT VIEW-April CPI rises more than expected; bond yields climb](https://longbridge.com/en/news/286108085.md)