According to the report, the consumer price index in April increased by 3.8% compared to the same period last year, up from 3.3% in March, to record its highest level since 2023. On the other hand, the wages of workers in regular categories increased by 3.6% during the same period, which means that income actually declined by 0.2% after accounting for inflation, in the first annual decline of this kind since 2023.
The report indicated that the war contributed to the dissipation of the financial margin that had relatively protected consumers, at a time when the labor market is characterized by weak employment and a decline in the ability of workers to change jobs to obtain higher salaries.
The website quoted Edward Jones’s chief economist, James McCann, as saying that American households still bear the direct burden of rising energy costs, adding that the continued effective closure of the Strait of Hormuz increases concerns that price pressures have not yet reached their peak.
The report explained that energy prices were the main driver of the recent jump in inflation, after they rose by about 4% during April, following an increase of approximately 11% in March, while they became 18% higher compared to the same period last year.
The pressure was not limited to energy, as the report pointed out that food prices returned to rising strongly in the second full month of the war, with the prices of groceries and eating outside the home recording the fastest monthly pace since the end of last year. Air travel ticket prices also continued to rise, rising by about 3% after a similar increase in March, with airlines affected by the rise in the cost of aviation fuel.
The report believes that American families had already absorbed a cumulative rise of approximately 30% in prices since the Corona pandemic, but this time the new pressures come on already exhausted budgets, amid a significant decline in consumer confidence.
While the report indicated that core inflation, which excludes food and energy, rose at a more moderate pace of 2.8% over the past year, it stressed that the Federal Reserve will monitor whether the Iran shock will remain confined to some items or will trickle down to the rest of the prices.
