The US CPI data for April has been released by the US Bureau of Labor Statistics (BLS). The annual inflation rate in the United States rose to 3.8% in April 2026, the highest since May 2023, from 3.3% in March. Figures exceeded predictions of 3.7% as the oil shock caused by the war with Iran continued to drive prices higher. With inflation at a three-year high, the US Fed is not expected to cut rates in a hurry.

The all items index rose 3.8 percent for the 12 months ending April, after rising 3.3 percent for the 12 months ending March. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent on a seasonally adjusted basis in April, after rising 0.9 percent in March, the U.S. Bureau of Labor Statistics reported today.

The all items less food and energy index rose 2.8 percent over the year, following a 2.6 percent increase over the 12 months ending March. The index for all items less food and energy rose 0.4 percent in April, after rising 0.2 percent in each of the 2 preceding months.

Indexes that increased over the month include household furnishings and operations, airline fares, personal care, apparel, and education. Conversely, the indexes for new vehicles, communication, and medical care were among the major indexes that decreased in April.

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The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all-items increase. The shelter index also increased in April, rising 0.6 percent. The index for food increased 0.5 percent over the month as the index for food at home rose 0.7 percent and the index for food away from home increased 0.2 percent.

Core consumer prices in the United States, excluding food and energy, increased by 0.4% from the previous month in April 2026, the most in more than a year, exceeding market estimates of 0.3%. The increase reflected the spread of rising energy prices from the Middle East war to key components of the consumer basket. Shelter prices increased considerably (0.6% vs 0.3% in March), as did transportation services (0.3% vs 0.6%) and clothes (0.6% vs 1%).

US Fed Rate Cut Expectations

With US inflation surging, the US Fed’s rate cut expectations have been pushed back. The FOMC meeting is set for June 16-17, along with a Summary of Economic Projections and the ‘dot plot’ indicating expected rate movements in 2026. Meanwhile, US stock market indices are at record highs, driven by rallies in AI-driven stocks, with many approaching a $5 trillion market cap after Nvidia’s lead.

US Stock Market

The market is closely following Middle East developments after President Trump’s remark that the US-Iran ceasefire was on “massive life support,” following his dismissal of Tehran’s peace proposal. Additionally, Trump is set to meet Chinese President Xi Jinping, with trade and artificial intelligence as key discussion topics.

US stock futures slipped on Tuesday after the US CPI data announcement. How the markets open and react to the April CPI numbers remains to be seen.

Disclaimer: This article is for general informational purposes only and does not constitute investment, financial, or trading advice. CPI data, inflation forecasts, and interest rate projections cited are based on information available at the time of writing. Market reactions to economic data are inherently unpredictable. Readers are strongly advised to consult a SEBI-registered investment advisor or qualified financial professional before making any investment decisions based on US inflation data or Federal Reserve policy outlook.