Washington, United States: The US Federal Reserve's preferred inflation measure rose in April by its highest year-on-year rate since 2023, government data showed on Thursday, as the economic fallout of President Donald Trump's Iran war hits Americans.
The personal consumption expenditures (PCE) prices index jumped 3.8 percent from a year ago, the Commerce Department said, up from 3.5 percent in March.
The new data was in line with the expectations of economists polled by Dow Jones Newswires and the Wall Street Journal.
The United States and Israel launched the war on February 28, engulfing the Middle East in conflict as Iranian retaliatory action targeted Washington's regional allies.
Tehran has also virtually blocked the key Strait of Hormuz, through which roughly a fifth of global oil and gas supplies normally pass, sending energy prices skyrocketing.
The new data on Thursday showed US personal consumption expenditures rose by 0.5 percent, but disposable personal income fell by 0.1 percent.
"You can see how Americans are getting squeezed financially right now," said Heather Long, chief economist at Navy Federal Credit Union.
Rising fuel prices saw US consumers spend $28.8 billion more on gasoline and related products in April over the same month a year ago, the data showed.
The average price of a gallon of regular gasoline in the United States has risen by about 48 percent since the start of the war, according to the AAA motor club.
Core PCE inflation, which strips out volatile food and energy prices, rose by 3.3 percent.
US Federal Reserve policymakers have flagged rising concerns about sustained inflation, which has remained above its long-term two-percent target for more than five years.
The Fed paused its rate-cutting cycle in January and has held the key interest rate in the world's largest economy steady since then, with a growing number of policymakers flagging that a rate hike could be needed to combat inflation.
Kevin Warsh took over as chief of the US central bank this month, and will chair his first meeting of the rate-setting committee in June.
US President Trump has waged an unprecedented campaign to pressure the Fed over interest rates, demanding cuts to turbocharge economic activity -- a move that could fuel inflation.
