US faces rising costs with Iran war driving energy prices, inflation higher

“Every day the war continues, prices climb higher and will stay there for months after it ends,” Alex Jacquez, a former member of the White House National Economic Council under former US President Joe Biden, said in a statement provided to Al Jazeera.

However, there was a 39 percent decrease in the price of eggs compared to this time last year, a number the White House touted in a post on social media platform X. The price, however, has ticked up on a month-by-month basis by 1.5 percent.

The White House also pointed to a decrease in smartphone prices of 12 percent since this time last year, although prices have increased by one percent from this time last month.

Smartphones were exempt from the tariffs that US President Donald Trump imposed last year.

Other tariff-exposed sectors saw price increases, with the price of clothing jumping by 0.6 percent, as did the cost of electronics overall. Both bedroom furniture and toys jumped 0.8 percent.

Healthcare costs, on the other hand, saw a decrease. Overall, drug prices fell by 0.4 percent from this time last month and were down 0.5 percent from this time last year. Prescription drug prices remained flat on a month-over-month basis and have tumbled by 0.9 percent.

“The April CPI report reinforces, however, that President Trump’s long-term economic agenda continues to deliver despite these disruptions: drug and hospital services prices are declining thanks to the president’s Most-Favored-Nation and price transparency initiatives,” Desai said.

On Wall Street, US markets tumbled on the heels of the report. The tech-heavy Nasdaq is down 1.4 percent, the Dow Jones Industrial Average is down by 0.6 percent, and the S&P 500 is 0.8 percent lower in midday trading.

The consumer price index report comes as Chairman Jerome Powell’s term leading the US Federal Reserve central bank ends this week. Powell is to be replaced by Kevin Warsh, who is expected to be confirmed by the Senate.

With inflation ticking higher and the job market stable, the Fed is expected to keep rates unchanged through the remainder of the year even though Trump has been demanding rate cuts ever since he took office in his second term.

“A firmer economy and stickier inflation will keep the Federal Reserve on a prolonged hold – we now expect the next rate cut in December, rather than June,” Michael Pearce, chief US economist at Oxford Economics, said in a note on Tuesday.

Last month, the central bank voted to maintain its benchmark interest rate at 3.5 – 3.75 percent. CME FedWatch, which tracks the likelihood of monetary policy decisions, says there is a 97 percent chance that rates will remain unchanged at the next policy meeting for the central bank.