US inflation rose to 3.8% in April, eroding Americans’ paychecks

By Alicia Wallace, CNN

(CNN) — For the first time in three years, Americans’ wages are no longer outpacing inflation.

Prices rose 0.6% on a monthly basis, driving the annual rate to 3.8%, the highest since May 2023, according to the latest Consumer Price Index data released Tuesday by the Bureau of Labor Statistics.

Economists had expected prices to rise 0.6% from March and for the annual rate to climb to 3.7%.

Prior to the late-February US-Israeli strikes on Iran, inflation had eased to 2.4%. Now, the energy price shock from the Iran war is further compounding longstanding affordability concerns for Americans weighed down by years of fast-rising prices.

However, at least in recent years, Americans’ pay growth has outpaced the rate of inflation. That changed last month: Annual inflation-adjusted average hourly wage growth went negative for the first time since April 2023.

Paychecks grew 3.6% from April of last year, on average; prices rose 3.8%.

This comes as Americans also have to contend with an energy price shock that’s rippling through the economy, making some of the most commonly purchased items even more expensive.

For example, prices of fresh fruits and vegetables, which are often transported by refrigerated diesel trucks, rose by 2.3%, the highest monthly increase for that category since 2010, BLS data shows.

While rising energy prices accounted for 40% of April’s monthly inflation gain, another contributing factor were higher housing-related price hikes (categorized by the BLS as “shelter”), which were boosted by a one-time adjustment related to last year’s historic government shutdown.

Shelter inflation, which is one of the heaviest weighted categories in CPI, jumped 0.6% for the month (double the pace notched in March).

In October, the BLS was unable to fully collect CPI data, resulting in an assuming that rental inflation was 0 for that month. As such, inflation at the end of last year was deceptively slower than it should have been.

The BLS uses a rotating panel for its rent surveys, and the next collection point for that October reading was six months later. So, it was expected that April 2026 would include a sharper-than-typical acceleration in the weighty “shelter” category.

The methodological payback from the October shutdown helped to boost a closely watched category of underlying inflation, said Oliver Allen, senior US economist at Pantheon Macroeconomics.

Core CPI, which excludes the volatile categories of food and energy, rose by a stronger-than-expected 0.4% last month and 2.8% annually.

Stock futures slightly pared losses but remained in the red Tuesday morning: Dow futures were down 18 points. S&P 500 futures were 0.3% lower and Nasdaq 100 futures were down 0.75%. Treasury yields fluctuated but remain slightly higher. The 10-year yield traded at 4.43%, up two basis points.

This story is developing and will be updated.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

CNN’s John Towfighi contributed reporting.