Inflationary impacts of the Iran war and President Donald Trump’s signature tariff policies seeped deeper into household budgets during April as U.S. consumer prices rose precipitously for the second consecutive month.

The consumer price index (CPI) increased 0.6% across the all-items index on a seasonally adjusted basis last month, the U.S. Bureau of Labor Statistics (BLS) reported Tuesday. Though CPI inflation jumped 0.9% in March, April’s rate of growth was nevertheless double the 0.3% monthly pace recorded in February.

On an annual basis, CPI inflation rose 3.8% in April, the largest annual gain since May 2023. Economists polled by The Wall Street Journal had predicted a 3.7% increase.

Headline CPI had risen 3.3% in March and 2.4% in February, prior to the onset of the war in Iran on Feb. 28.

“April’s CPI report reinforces that inflation is proving sticky, not solved,” commented Sam Williamson, senior economist at First American Financial Corp. “Higher energy costs are now spilling beyond the gas pump, giving the Fed little urgency to cut rates anytime soon.”

So-called “core” CPI, which strips out volatile food and energy prices, rose 2.8% over the year ending in April, compared to a 2.6% yearly increase in March. Core CPI prices accelerated on a monthly basis, doubling from 0.2% growth in March to 0.4% growth in April, led by rising shelter, personal care, apparel, travel and education expenses.

The shelter index increased 0.6% over the month in April after rising 0.3% in March and 0.2% in February. Owners’ equivalent rent and the index for rent both increased 0.5% last month after rising 0.3% and 0.2% in March.

“Conversely, the indexes for new vehicles, communication, and medical care were among the major indexes that decreased in April,” said the BLS. While rising energy costs accounted for more than 40% of the all-items index increase, fuel price hikes in April were much less steep than in the first month of the Middle East conflict.

After the energy index spiked 10.9% from February to March, its largest monthly increase since September 2005, that component of the CPI cooled measurably in April as a temporary ceasefire took hold and negotiations to end the Middle East conflict commenced. Still, the 3.8% monthly gain in April pushed the energy index 17.9% higher over the year.

Prices at the gas pump that jumped 21.2% on a seasonally adjusted monthly basis in March eased to 5.4% growth in April, landing 28.4% higher than a year ago. Fuel oil prices eased to 5.8% growth in April from 30.7% in March, but remained 54.3% higher annually.

Energy services prices, however, accelerated in April following a more tempered response to the ongoing supply crunch than energy commodities in March.

After 0.2% growth in January and February and 0.4% growth in March, the energy services index jumped 1.6% in April to land 5.4% higher than a year ago.

After holding flat in March, the food component index rose 0.5% over the month, registering a 3.2% gain from a year ago. Drilling down, “food at home” — a proxy for household grocery store purchases — rose 0.7% in April, with five of the six major grocery store food group indexes increasing in April. “Food away from home” saw a 0.2% increase, by comparison.

Meanwhile, “real” or inflation-adjusted earnings dropped by 0.5% over the month and were 0.3% lower over the year as wages struggled to keep pace with rising prices, eroding affordability for consumers battling surging costs across a range of household items.

Preston Caldwell, senior U.S. economist at ratings firm Morningstar, described the Iran war’s second-order inflationary impacts on food as “not surprising, as energy is a major input into food production and transportation,” according to commentary he shared Tuesday.

Caldwell explained that April data showed higher oil prices “starting to flow through into inflation beyond the direct impact of consumer purchases of gasoline, but also via nonenergy goods for which oil is an input,” as well as “other signs of inflation broadening which look more concerning.”

“Core nondurables prices increased 0.3%, with large increases in apparel, toys, and other items,” he cited. “This probably reflected both the impact of energy as well as lingering tariff effects.”

A second straight month of firming hiring gains that surpassed forecast estimates and kept the U.S. unemployment rate unchanged at 4.3% in April allayed fears of crumbling labor conditions after employers shed 156,000 jobs in February. As a result, market analysts and policymakers alike have shifted their focus to renewed inflation concerns.

“For the Federal Reserve, the combination of higher energy prices, lingering tariff effects and a firmer core reading is likely to keep policymakers from making any policy adjustment until they see several months of cleaner data,” Williamson from First American noted.

He added that mortgage rates will likely remain “elevated for longer as rising Treasury yields and persistent inflation keep pressure on borrowing costs, even as housing fundamentals continue to improve.”