In April, US inflation accelerated to 3.8% year-on-year, the highest rate since May 2023, primarily driven by escalating energy prices linked to the ongoing war with Iran. The personal consumption expenditures (PCE) price index rose by 0.4% month-on-month, following a 0.7% increase in March. The conflict has disrupted shipping in the Strait of Hormuz, leading to significant increases in gasoline prices, which surged 12.3% in April and have risen over 50% since the war began in late February. Core PCE inflation, which excludes volatile food and energy prices, also increased to 3.3% year-on-year. As inflation continues to outpace wage growth, consumer spending has slowed, with a 0.5% increase in April compared to a 1.0% rise in March. This inflationary environment poses challenges for the Republican Party, particularly for former President Trump, as soaring prices could threaten their congressional majority in the upcoming midterm elections. The Federal Reserve is anticipated to keep interest rates steady in the 3.50%-3.75% range into 2027.