Inflation<\/a> jumped for a second consecutive month in April as the Iran war<\/a> drove up gasoline prices and strained household budgets, government data on Thursday showed.<\/p>\n Prices rose 3.8% in April compared to a year earlier, according to the Personal Consumption Expenditures (PCE) Index, an inflation gauge preferred by the Federal Reserve. The PCE stood at 2.8% as recently as February.<\/p>\n Inflation now stands at its highest level since May 2023, the Commerce Department<\/a> report showed.<\/p>\n The savings rate, meanwhile, fell to 2.6%, its lowest level since 2022, suggesting some strapped consumers are struggling to stash away extra funds.<\/p>\n A persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation. The latest reading comes days after Fed Chair Kevin Warsh began a four-year term atop the central bank.<\/p>\n For now, futures markets overwhelmingly expect the Fed to hold interest rates steady when policy makers meet next month, according to the CME FedWatch Tool<\/a>, a measure of investor sentiment.<\/p>\n Meat is displayed at a grocery store in Dallas, April 15, 2026.<\/span><\/span><\/span><\/p>\n Lm Otero\/AP<\/span><\/p>\n<\/div>\n<\/figcaption><\/figure>\n<\/div>\n<\/div>\n<\/div>\n However, markets peg the chances of a quarter-point rate increase by the end of the year at more than one in three, well above where odds of a rate hike stood prior to the war, the tool shows.<\/p>\n The benchmark interest rate stands<\/a> at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.<\/p>\n The Middle East conflict prompted the Iranian closure of the Strait of Hormuz<\/a>, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff triggered one of the largest oil shocks ever recorded.<\/p>\n As a result, gasoline prices surged. The price of an average gallon of gas stood at $4.42 as of Thursday, AAA<\/a> data showed \u2013 an increase of $1.44 per gallon since the war began on Feb. 28. That amounts to a 48% price jump in about three months.<\/p>\n<\/div>\n![\"Asset](\"https:\/\/i.abcnewsfe.com\/a\/e4d637df-3997-413e-b22c-ce9e6bbfcde3\/grocery-store-1-ap-gmh-260528_1779980642651_hpMain.jpg?w=375 "\\"Asset")
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