Azernews.Az

by Alimat Aliyeva

Inflation in the United States accelerated sharply in April, reaching its fastest pace in nearly three years, largely driven by rising energy prices amid escalating tensions in the Middle East and the ongoing conflict involving Iran, AzerNEWS reports.

The increase in prices has strengthened expectations among economists that the U.S. Federal Reserve may keep interest rates unchanged for an extended period in order to contain inflationary pressure.

According to Reuters, rising costs are continuing to erode household purchasing power and could slow consumer spending and economic growth in the coming months. Data released on Thursday also showed that inflation-adjusted household incomes fell for the third consecutive month in April, highlighting growing financial pressure on American families.

“With inflation remaining stubbornly high, the Federal Reserve faces an increasingly difficult balancing act,” said Olu Sonola, head of U.S. economic research at Fitch Ratings. “The Fed cannot directly eliminate supply shocks, but it also cannot ignore inflationary pressure spreading across the broader economy.”

The U.S. Commerce Department reported that the Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation indicator — rose by 3.8% year-on-year in April, marking the strongest increase since 2023. In March, the figure stood at 3.5%.

Analysts say the conflict in the Middle East has disrupted shipping routes through the Strait of Hormuz, pushing global energy prices higher and creating new strain on supply chains. The situation has affected the prices of fuel, fertilizers, aluminum, and many everyday consumer goods.

According to the U.S. Energy Information Administration, average gasoline prices rose by more than 12% in April alone and have surged by over 50% since the conflict intensified earlier this year.

At the same time, Americans are paying more not only for fuel, but also for housing, transportation, hotels, and коммунальные услуги. Prices for services continued to rise steadily, while housing and utility costs increased by 0.6% during the month.

Another worrying sign for economists is the rapid decline in household savings. The U.S. savings rate fell to 2.6% in April — its lowest level since mid-2022 — as many Americans were forced to spend more of their reserves to keep up with rising living costs.

Interestingly, some analysts compare the current situation to the inflationary shocks of the 1970s, when geopolitical conflicts and energy crises triggered prolonged economic instability in the United States and Europe. Experts warn that if oil prices continue climbing, inflation could remain elevated much longer than previously expected.