An inflation report on Tuesday will provide a fresh gauge of prices as the Iran war<\/a> ratchets up costs for gasoline<\/a>, airfares and other expenses.<\/p>\n Economists expect consumer prices to have risen 3.8% in April, when a surge in gasoline costs took hold weeks into the war, which would mark a significant acceleration from 3.3% in the previous month<\/a>.<\/p>\n As recently as February, inflation stood<\/a> at 2.4%, clocking in just a tick above the Federal Reserve\u2019s target level of 2%.<\/p>\n The Middle East conflict prompted the Iranian closure of the Strait of Hormuz<\/a> in March, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff prompted one of the largest oil shocks ever recorded.<\/p>\n The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.<\/p>\n Crude oil is the main ingredient in auto fuel, accounting for more than half of the price paid at the pump, according to the federal U.S. Energy Information Administration<\/a>.<\/p>\n The price of an average gallon of gas stood at $4.52 as of Monday, AAA<\/a> data showed \u2013 an increase of $1.54 per gallon since the war began on Feb. 28. That amounts to a nearly 52% price jump in about two-and-a-half months.<\/p>\n The surge in fuel prices sent costs surging for gas-dependent transportation, such as airline tickets. In March, airfare costs jumped more than 3% from a month earlier.<\/p>\n Within weeks, the jump in prices could spread to groceries, furniture and just about any other item delivered by diesel-fueled trucks and tankers, some analysts previously told<\/a> ABC News.<\/p>\n The recent rise in prices has left many consumers feeling glum. In May, consumer sentiment fell to the lowest level ever recorded, according to a monthly survey conducted by the University of Michigan<\/a> since 1978.<\/p>\n Vessels in the Strait of Hormuz in Musandam, Oman, May 6, 2026.<\/span><\/span><\/span><\/p>\n Reuters<\/span><\/p>\n<\/div>\n<\/figcaption><\/figure>\n<\/div>\n<\/div>\n<\/div>\n Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shoppers remain pessimistic. In theory, a slowdown of spending could slow the economy.<\/p>\n By some measures, however, the U.S. economy has proven resilient amid the war.<\/p>\n Hiring slowed in April but remained solid<\/a>, exceeding economists\u2019 expectations, federal government data last week showed. The unemployment rate held steady at 4.3% in April, a low level by historic standards. Additionally, the economy grew<\/a> at an annualized rate of 2% in the first quarter of 2026, marking an acceleration from 0.5% growth recorded in the previous quarter.<\/p>\n However, a persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation.<\/p>\n The Fed has opted to hold interest rates steady<\/a> at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.<\/p>\n If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking an economic slowdown.<\/p>\n Markets forecast a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool<\/a>.<\/p>\n<\/div>\n![\"crude](\"https:\/\/i.abcnewsfe.com\/a\/6ed861d0-2ed2-4ddc-8302-52a6b391c5d7\/iran-1-rt-gmh-260506_1778071801591_hpMain.jpg?w=375 "\\"crude")
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