US inflation accelerated to 3.8% year-over-year in April, as measured by the Consumer Price Index (CPI), up from +3.3% in March and above the +3.7% consensus among economists. It is the fastest pace since May 2023, and it lands at the worst possible moment for the new Federal Reserve leadership.

US inflation crushes dovish Warsh-Trump hopes, hottest pace since 2023

Bad news for Kevin Warsh, the incoming Fed chair, and bad news for President Donald Trump, a vocal supporter of a monetary policy built around low US rates — even with inflation running hot.

With the +3.8% jump, headline CPI rose in April at the fastest annual pace since May 2023. On a monthly basis, the index gained +0.6%, in line with expectations.

Excluding the more volatile food and energy components, core CPI rose +0.4% month-over-month and +2.8% year-over-year, confirming that the underlying pace of price growth remains well above the Fed’s 2% target.

The US-Iran war continues to send the Fed its bill: the central bank now has very few reasons — if any — to ease monetary policy again, despite pressure from Trump, who declined to renew the mandate of current Fed chair Jerome Powell and picked Warsh precisely in the hope of seeing US rates come down.

Markets have already drawn their conclusions, pricing in unchanged US rates for the rest of the year and starting to factor in the possibility of further tightening. The latest US jobs report — non-farm payrolls came in at +115,000 in April — has only reinforced the inflationary picture.

Energy prices boom, gasoline jumps more than 28%

The biggest driver of April’s inflation spike, as was the case in the eurozone, was the surge in energy prices, contaminated — as in the euro area — by the consequences of the conflict in the Middle East.

Energy was the largest contributor to the CPI increase, rising +3.8% month-over-month and a striking +17.9% year-over-year. Food prices also accelerated, climbing +0.5% on the month and +3.2% on the year.

The gasoline index was even more punishing, surging +28.4% year-over-year.

Inflation is also making itself felt in components not directly exposed to the US-Iran war. Shelter costs, which account for roughly one-third of the CPI, rose +0.6% on the month — the same pace as apparel — while airline fares climbed +2.8% month-over-month and a stunning +20.7% year-over-year.

Dovish hopes on US rates from Warsh and Trump further dismantled

The numbers reinforce both market pricing and the views of several economists and market strategists: Warsh’s Fed will continue doing what Jerome Powell has been doing since the start of 2026 — leaving US rates parked in the 3.5%-3.75% range.

Among the chorus is investor Paul Tudor Jones, who, asked by CNBC about the direction of rates, was blunt: «Do I think (Warsh) will cut rates? Probability equal to zero.»

Even if Warsh saw reasons to cut, he would probably not risk widening the fracture that has already opened inside the FOMC, the Federal Reserve’s monetary policy arm. As confirmed at the latest meeting, the committee has not been this split in 34 years — a warning shot for the new chair, who is unlikely to want his debut FOMC meeting to fuel even greater internal tension.

In short: between an inflation print running near 4%, a Fed openly fractured, an energy shock fed by war in the Middle East, and a White House pushing for cuts, Kevin Warsh inherits a job in which doing nothing may already count as the boldest decision available.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on May 12, 2026 as «Inflazione USA +3,8% ad aprile, record da maggio 2023. Tassi Fed, Warsh con le spalle al muro?». It has been translated and adapted for an international audience by the Money.it International desk.