Current U.S. Inflation Rate Is 3.8%: Chart and Why It Matters

Fueled by Iran War, Inflation Jumps to 3.8%

Both major indexes, the CPI and the PCE, show inflation spiking in April, spurred by rising energy prices.

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Edited by other Updated May 28, 2026 Updated on May 28. Updated on May 28 Inflation is the rate at which the price of goods and services increases. As a result of inflation, the purchasing power (value) of money decreases over time. Inflation affects the prices of everything around us.

Current inflation readings

CPI for April CPI for April The consumer price index (CPI) increased 0.6% in April, compared with a 0.9% rise in March, according to the latest report from the U.S. Bureau of Labor Statistics. The year-over-year increase was 3.8%, up from 3.3% in March. The core CPI, excluding food and energy, was up 2.8% from a year ago, up 0.4 percentage point from March’s annual rate. » MORE: ‘Warflation’ will hit more than just gas prices » MORE: PCE for April PCE for April The personal consumption expenditures (PCE) price index for April, released by the Bureau of Economic Analysis on May 28, showed that prices rose at a 3.8% annual rate in April. Core PCE (excluding food and energy) rose at a 3.3% annual rate. Here’s what NerdWallet’s senior economist Elizabeth Renter had to say about the latest CPI figures: After accounting for inflation, the primary driver of economic growth slowed in April, as consumer spending was essentially flat. Households seem to be reining in spending a bit as they face continued elevated inflation along with the uncertainty of ongoing war. Inflation appears to be quickening, both due to the oil price shock and its downstream effects, and the ongoing impact of tariffs. While prices are rising faster than comfortable, incomes are not, putting consumers in an uncomfortable spot. Rising prices, sluggish income and economic uncertainty could set the stage for a broader pullback in consumer spending and therefore economic growth. We’ve been watching consumer sentiment measures for months and waiting for the lackluster vibes to translate to changed behavior. The longer that current pressures persist, the more likely they are to hit more and more households, and the greater chance the consumer resilience we’ve seen in recent years will falter. In other words, for an increasing share of consumers, the bad feelings about the economy are likely no longer just vibes. PPI for April PPI for April The producer price index (PPI), which tracks prices at the wholesale level, went up 1.4% in April after a 0.7% increase in March, according to the most recent data from the BLS released on May 13. The increase was the largest since March 2022 when PPI rose 1.7%. On an annual basis, the index rose 6% — the highest 12-month increase since December 2022 when PPI rose 6.4%.

How inflation is measured

There are three separate reports released each month by individual government sources. Each one groups together different buckets of goods and services to measure how much prices have changed. Each index is used as a proxy for inflation: Consumer price index (CPI) Personal Consumption Expenditure (PCE) price index Producer price index (PPI) The CPI and the PPI are released each month by the U.S. Bureau of Labor Statistics (BLS), while the PCE is released by the Bureau of Economic Analysis (BEA). Typically, you’ll see the inflation rate reported for all items included in the reports. But it's also common to see it reported without energy or food price changes, because those categories tend to be more volatile. This version of the index is known as “core inflation.” » MORE: Run the numbers with NerdWallet’s inflation calculator. MORE: The CPI is the most commonly used inflation proxy so if someone says the inflation rate is 3.8% — the rate for April — they’re probably referring to the CPI. However, the PCE — specifically the core PCE — is the preferred inflation measure used by the Federal Reserve Open Market Committee (FOMC) to make decisions on interest rates.

Why inflation measures matter

The CPI, PCE and PPI are indicators of how the U.S. economy is doing. Monetary policymakers consider a low, stable inflation rate to be the mark of a healthy economy. The Federal Reserve targets a 2% annual inflation rate because it encourages businesses and consumers to continue spending, saving, borrowing and investing.

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When prices rise sharply, it can mean that the economy is overheated, with too much demand for or too little supply of goods and services. And of course, higher consumer prices — whether on everyday necessities like eggs or big ticket items like cars — put a strain on household budgets, especially if salaries aren’t keeping pace with inflation.

What is the CPI?

The consumer price index, or CPI, measures the change in average prices paid by consumers for a set of goods and services that represent regular expenses, like groceries or gas. The CPI is calculated by the U.S. Bureau of Labor Statistics and is used as a proxy for inflation. Every month, the BLS releases updated CPI data, showing monthly and annual changes in average prices. inflation April CPI report April CPI report The CPI increased 0.6% over the one-month period from March to April, after increasing 0.9% from February to March. Over the past 12 months, the CPI increased 3.8%, up from a 3.3% annual rate in March. Core CPI — a measure that excludes food and energy prices because of their volatility — rose 0.4% from March to April, and 2.8% over the past 12 months, up from 2.6% in March. Energy prices rose 3.8% in April, after rising 10.9% in March, led almost entirely by gasoline increases. Over the last 12 months, energy is up 17.9%, compared with a 12.5% annual increase in March. Gasoline prices rose 5.4% in April and are up 28.4% over the last 12 months. Energy prices Food prices rose 0.5% in April, after being unchanged in March. Food overall is up 3.2% over the last year. Food at home rose 0.7% in April, while food away from home rose 0.2%. Food prices Shelter, which includes rent, increased at a rate of 0.6% in April, up from 0.3% in March. See below for a look at the CPI’s key indexes. Shelter The latest CPI report shows prices increased in April for household furnishings and operations, airline fares, personal care, apparel, and education. Prices went down in other areas. New vehicles, communication and medical care indexes all fell. When is the next CPI report released? When is the next CPI report released? The next CPI report will be released on June 10 and show data for May.

What is the PCE?

The personal consumption expenditures price index, or PCE, measures changes in consumer spending on typical goods and services. It’s used to calculate inflation (or deflation) in the U.S. economy. Updated each month by the Bureau of Economic Analysis (BEA), the PCE tracks what kinds of goods and services consumers buy and how much they pay for them, as well as how consumers change their spending habits when prices rise or fall. For example, if rising gas prices lead consumers to drive less and cut down on fuel spending, the PCE will reflect that change in purchase frequency.

What’s the core PCE and why does it matter so much?

Core PCE is the Federal Reserve's preferred measure of inflation. Core PCE excludes food and fuel — two categories that frequently experience price swings. Increases in both PCE and core PCE can signal an increase in inflation; decreases may signal a decline in inflation. These results could also indicate that inflation is still growing, but at a cooler pace. The Fed’s target for inflation is 2% on an annual basis. PCE is at 3.8% over the past year, up from 3.5% in March. Core PCE rose 3.3% over the past year, up from 3.2% in March. When is the next PCE report released? When is the next PCE report released? The PCE is released monthly in the BEA’s Personal Income and Outlays report. The next release, covering May, is scheduled for June 25.

What is the PPI?

The PPI tracks the prices that producers and manufacturers receive for their goods from retailers and distributors. The PPI rises when producers and manufacturers charge higher prices for their products, likely to offset the rising costs of raw material or distribution. In this way, PPI functions as another measure of inflation, similar to the consumer price index and personal consumption expenditures price index, which track the prices consumers pay for goods and services. But unlike those two indexes, the PPI shows how prices are changing for retailers who are buying at the wholesale level. “In general, the PPI is about the price change from the perspective of the seller,” says Thomas McDonald, a senior economist at the BLS. That makes the PPI a leading indicator of inflation since higher prices on the producers’ end often lead to increased prices for consumers.

April PPI report

The index rose 1.4% in April. Compared to a year ago, the index increased 6%. Here are highlights from the latest PPI report: Core PPI, which excludes food, energy and trade services, increased by 0.6% in April — the highest growth since October 2025. It rose 4.4% compared to a year ago — the highest 12-month increase since February 2023 (+4.5%). Core PPI Final demand goods prices rose 2% in April, compared to 1.9% in March. Much of that can be attributed to a 7.8% monthly rise in the prices for final demand energy. Final demand goods prices Final demand services prices rose 1.2% in April — the largest increase since March 2022 (+1.3%). Final demand services prices When is the next PPI report released? The BLS releases a monthly PPI report showing how the index changed. The PPI report for May will be released on June 11. When is the next PPI report released?

Why inflation matters

Why inflation matters The effects of inflation are felt throughout an economy. As prices rise, what you can buy now will lessen over time. Being able to combat, or at least keep up with, inflation and sustain the purchasing power of your money is one of the main reasons to invest your money. Consumers care about inflation because it affects costs and their standard of living. Businesses carefully watch the price of raw materials that go into their products, as well as what wages they need to pay their employees. Inflation affects taxes, government spending and programs, the level of interest rates and more. A low, steady or predictable level of inflation is considered positive for an economy. It signals growth and healthy demand for goods and services. As businesses generate more goods and services to keep up with demand, they need to hire more workers, which generally leads to higher employment and wage growth. Those workers then purchase things they need and want, and the cycle continues. However, when inflation gets too high or too low, it becomes dangerous because it’s hard to keep supply and demand, along with economic growth, in check. This brings us to the importance of investing. Although you’ll earn interest from the bank on money in your savings account, the interest rate you receive usually won't match or even come close to beating the inflation rate. That’s why it can make sense to invest your money if you can afford to and grow that money’s value over time. That way, you can buy the same amount of goods and services in the future. When creating a plan to reach your financial goals, it’s important to bake in a realistic inflation rate for future expenses so you’re saving enough to meet your needs. A financial advisor can help you do that.

How to protect against inflation

Avoid hoarding cash

To make sure your money doesn’t lose too much value, it’s important to invest and not keep too much money in cash. Inflation means your money will probably buy less over time, so consider investing the money you don’t intend to use in the next three to five years so that you can avoid a decrease in purchasing power. » MORE: How to invest $100,000 » MORE:

Diversify your portfolio

Another way to prepare for inflation is by having a well-diversified investment portfolio. Diversification, when you spread your investments across asset classes (stocks, bonds, cash, real estate, etc.), various industries and countries, helps enhance investment returns while simultaneously reducing risk, such as from inflation. Certain investments are more inflation-tolerant than others or rise with inflation. Some of these natural inflation hedges include: Real assets. Assets such as gold, silver or real estate, which may retain value or provide pricing power, may help withstand inflation. For example, landlords sometimes raise rents as inflation rises. Real assets. Stocks. Especially stocks with proven earnings growth and low debt. Interest rates tend to rise with inflation, causing companies with high debt to face higher payments. Stocks. Treasury Inflation-Protected securities. During inflationary times, rising interest rates negatively impact traditional bonds because bond prices and interest rates have an inverse relationship. TIPs are a type of bond indexed directly to CPI meant to help investors preserve purchasing power; I bonds are another option tied to inflation. Treasury Inflation-Protected securities. »MORE: Compare returns on Treasury bills, Treasury notes and Treasury bonds »MORE:

Have a strategy

Making sure your investments are set up to safeguard against inflation is important, and there are many factors to consider. Seeking a second opinion from a financial advisor can be useful to ensure that you’re on the right track and have prepared your portfolio to weather all seasons of varying economic environments. NerdWallet writer Taryn Phaneuf and former NerdWallet writers Tiffany Lam-Balfour and Alieza Durana contributed to this article. NerdWallet writer Taryn Phaneuf and former NerdWallet writers Tiffany Lam-Balfour and Alieza Durana contributed to this article. Explore more on About the author Helhoski Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is an on-air contributor and producer of Money News segments for NerdWallet's Smart Money podcast. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has been syndicated in news outlets nationwide including The Associated Press, The New York Times, The Washington Post, The Los Angeles Times and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York. Published in Current inflation readings How inflation is measured Why inflation measures matter What is the CPI? What is the PCE? What’s the core PCE and why does it matter so much? What is the PPI? April PPI report Why inflation matters How to protect against inflation Why Is Everything So Expensive? Will Prices Ever Go Down? For Some Things, They Already Have Egg Prices Remain Largely Stable By Taryn Phaneuf Trump’s Tariffs Begin: Here’s What Could Get More Expensive By Taryn Phaneuf Austin Is Booming. So Why Are Rents Falling? By Taryn Phaneuf Can Trump Lower Gas Prices as President? By Taryn Phaneuf Why Is My Car Insurance So High? By Kayda Norman, Ryan Brady, CFP® Travel Inflation Report: May 2026 By Sally French, Benjamin Din Are Car Prices Going Up or Down? By Shannon Bradley How to Shop Amid Tariff Uncertainty By Kimberly Palmer Southwest Ditches Free Bags, Adds Basic Fares By Craig Joseph