BREAKING: April inflation rate surges to 3.8%

Added: 2026-05-12

[00:00:00]We're back with some breaking inflation data and what could be the clearest look at the economic impact of the Iran war.

[00:00:05]>> Yeah. In April, inflation rose 3.8% yearover-year. That's the highest level in nearly 3 years. It was up 0.6% month overmonth.

[00:00:16]>> Here with us is NBC News chief business correspondent Christine Romans. We're also joined by Investopedia's editor and chief and chief business editor of People Inc. Caleb Silver. Good morning to you both. Christine, I'll start with you just to walk us through these numbers. What are they showing? How do they compare to previous months?

[00:00:29]>> Well, look, you know, 3.8% just shows you how hot the Iran war is driving up prices here. This is a significant um jump here. 3.8%. Remember, the Fed, the Federal Reserve thinks 2% is the sweet spot for inflation. 3.8% shows you how those higher energy prices are fueling in to just about everything overall here. And you know, it's not just it's not just the energy prices. It is uh gas prices, but it's also this. By the way, this is the government shutdown, so you you can't actually see what prices were there, but now we're more like this here. So, those higher energy prices starting to feed through everything. I mean, I'm looking at airfares up almost 21% over the past year, >> Caleb, we expected it to go up, but what's your reaction to this number?

[00:01:18]>> Yeah, hot, hot, hot, but especially in the places where we have to spend money.

[00:01:21]So obviously that's gasoline, that's diesel and that affects things like fertilizer prices goes right through the supply chain. So this ends up really at the grocery store where you see still see food prices very high. Some of that is due obviously to diesel prices and fertilizer prices, but we just have this general trend of higher inflation.

[00:01:38]Christine mentioned the Fed likes inflation around 2%. Those days are long gone. Consumers know inflation probably isn't even 3.8%. It's higher than that when you think about the things we buy on a daily basis.

[00:01:48]>> Yeah. And Christine, let's go through those categories because I know that's where we are seeing the pain that Caleb just said. Food, energy, shelter.

[00:01:54]>> Yeah, these numbers are hot off the presses and there's a lot of them in here and some that I really am interested in. Fresh fruits and vegetables, those are more expensive.

[00:02:00]Household furnishings, airfare. You know what I see? And I bet Caleb agrees with me. I see things that are shipped with diesel, which is 70% of the stuff in the United States that gets to your store shelves. Those things cost more because look, farmers, ranchers, shippers, small businesses, they have a significant new cost that they have to deal with. Diesel prices are $2 more today than they were a year ago. These are those gas prices about $450 here right now. And here's something else. What we're hearing from uh economists and you know the the brainiacs who study this is they think that the energy shock is just beginning to come into these numbers that we have a lot more pain ahead especially with no real off-ramp in sight here for getting energy costs under control in the near term.

[00:02:48]>> And Caleb, you mentioned the Fed. We know it meets next month. I have to imagine this just locks in what was already inevitable for them.

[00:02:55]>> Yeah. You mean in 36 days, 5 hours and 13 minutes, we'll probably have a new Fed chair by then, Kevin Mor confirmation hearing set for today. And the inkling was for rates to go down.

[00:03:04]Rates aren't going anywhere. I just looked out until the meeting in September. You actually see a 9% probability of a rate increase by then if inflation doesn't cool.

[00:03:13]>> How possible is that? I mean, that's >> we're looking at three three months. So, it really depends on the duration of this war, how high oil prices stay for how long. That's going to impact just about everything. And then the Fed's going to have a very tricky decision on its hands, probably with a new Fed chair in charge.

[00:03:28]>> Christine, this is the first time that inflation has outpaced wage growth um since 2023, a while here. What does this mean for consumers whose budgets are already under pressure when you have a fact like that?

[00:03:40]>> Look, the consumer sentiment indicators have been telling us this. People feel like the money is not lasting the month.

[00:03:45]And guess what? The numbers show the money's not lasting the month. The the money that you're making, your wages are growing 3.6%. your costs are rising 3.8%. That's your purchasing power. Uh and that is why I think so many people have felt so rotten about the economy.

[00:04:01]To to to piggyback on what uh Caleb said about the Fed, you know, even at the last Fed meeting, there were three Fed governors who didn't even want to indicate that maybe the next move would be a cut. It was equally likely that there could be an interest rate increase. We've seen a decent job number in the interim. So, if the job market's okay and you've got hot inflation numbers like this, the idea is why wouldn't the Fed be wanting to raise interest rates to not have a repeat of the last time we were in this kind of zone? Remember when they were raising interest rates too late to try to cut uh to try to combat inflation? So, there's some recent recent memory here on the Fed, people on the Fed board who don't want inflation to get out of control. So for everyday Americans, they can't control what the Fed does. But what's some advice you have for them who are trying to manage the fact that maybe they're even losing money right now because inflation is outpacing wages.

[00:04:46]>> They are. The value of the dollar just keeps declining. Brace yourself for it.

[00:04:49]And consumers aren't stupid. They know that inflation is going to be here for a while. I was looking at consumer expectations for inflation throughout the rest of the year. We think it's going to be around 4.5%. So use that as your baseline and build your financial plan around that because prices aren't going down anytime soon.

[00:05:04]>> All right, Caleb, Christine, thank you both taking us through some breaking news. Appreciate it.

[00:05:08]>> We thank you for watching and remember, stay updated on breaking news and top stories on the NBC News app or watch live on our YouTube channel.