US inflation jumps to 3.8% as Middle East war stokes price rises

US inflation jumped to 3.8 per cent in April, its highest level in three years, as Donald Trump’s war in the Middle East continued to drive a sharp rise in fuel prices.

The Bureau of Labor Statistics’ consumer price index was up from year-on-year gains of 3.3 per cent in March and 2.4 per cent in February, before the conflict broke out. Economists polled by Bloomberg had expected an increase to 3.7 per cent.

Tuesday’s inflation figure is the highest since 2023 as the country reeled from the energy shock triggered by Russia’s invasion of Ukraine.

The report is the latest indicator of how the conflict is reverberating across the US economy. The closure of the Strait of Hormuz has sent global crude prices soaring and triggered an international energy crisis.

Optimism over a peace deal had helped to temper prices in recent days, but that faded after Trump on Sunday dismissed Iran’s response to the latest US proposal as “unacceptable”. The president has warned that a month-long ceasefire is now on “massive life support”.

US petrol prices have jumped by more than half since the conflict erupted, reaching $4.50 a gallon on Tuesday, according to the AAA. Diesel has risen by a similar margin to $5.64, close to its all-time high.

Lawmakers this week proposed legislation to suspend federal fuel taxes to provide relief to motorists.

This is a developing story