US inflation extends upward trend in April amid persistent price pressures

US inflation rose by 0.6% in April following a 0.9% increase in March, matching market expectations, while annual consumer prices accelerated to 3.8%, above forecasts of 3.7% and sharply higher than the 3.3% reading recorded in March, marking the strongest annual increase in three years.

Core inflation, which excludes volatile food and energy components, increased 0.4% on a monthly basis after rising 0.2% in the previous month, while the annual core CPI climbed to 2.8% in April from 2.6% in March.

The second consecutive monthly rise in consumer prices was driven largely by the sharp increase in oil prices amid supply shortages caused by the prolonged closure of the Strait of Hormuz. The latest inflation figures are expected to reinforce pressure on the Federal Reserve to maintain interest rates at current levels for an extended period, while also keeping the door open for a more hawkish policy stance if inflationary pressures persist.

Economists widely expect the Fed to leave its benchmark interest rate unchanged within the 3.50%–3.75% range, after policymakers stepped away from earlier expectations of policy easing and signaled that worsening economic conditions could require faster action from the central bank.

The stronger inflation readings are also likely to intensify political pressure on Donald Trump and the Republican Party ahead of the November midterm elections, as many Americans continue to blame the administration for persistently high fuel prices, despite Trump’s 2024 election campaign being heavily centered on promises to bring inflation under control.