April CPI Expected to Hit Near Three-Year High

CNBC reported Monday that April CPI is expected to reach an annual rate of 3.7%. That would mark the hottest inflation print in nearly three years.

April CPI Could Reshape Market Expectations

The Dow Jones economist consensus projects a 0.6% monthly jump in April CPI. That monthly surge would drive the annual headline rate to 3.7%. The last time prices ran this hot was autumn 2023, when energy costs were cooling from Russia’s Ukraine invasion shock.

Analysts warn the report may do more than confirm an uncomfortable number. Jordi Visser, head of AI Macro Nexus Research at 22V, told CNBC the two-month inflation trend now resembles 2022 more than any disinflation story markets have been pricing in. Financial markets have largely treated the current spike as temporary and driven by a single cause.

Energy and the Iran War: Background

The current inflation surge stems significantly from the ongoing Iran war and its effect on oil supply routes. The Strait of Hormuz remains closed, squeezing global energy markets. Visser noted persistent cost increases in transportation and warehousing as evidence the shock is spreading well beyond the energy sector itself. “Oil is not the whole story,” he said, but the simultaneous rise in movement, storage, and replenishment costs suggests a broader and more durable price problem.

Even core CPI, which strips out food and energy, is forecast to climb 0.4% monthly and 2.7% annually. That figure would signal underlying price pressure independent of the oil shock.

Also Read: What Closed Strait of Hormuz Means for Global Oil Prices

Fed in a Difficult Spot as Rate Hike Risk Returns

The Federal Reserve now faces pressure from multiple directions simultaneously. Sticky inflation and a stable labor market argue for tighter policy. Meanwhile, the US fiscal position is deteriorating. Incoming Fed Chair Kevin Warsh has signaled a preference for rate cuts, which Visser warned could produce an inflationary boom by year-end if implemented prematurely.

Bank of America US rates strategy head Mark Cabana cautioned that markets are underpricing the possibility of actual rate hikes. Derivatives contracts hedging inflation risk sit near their highest levels since October 2025 but remain relatively contained. Cabana wrote that any hiking cycle would likely be smaller than the post-Covid episode, which cost the S&P 500 roughly 25%. Still, he warned that risk assets would react negatively to any Fed moves designed to slow growth.

Read Next: Fed Holds Rates Steady as Inflation Uncertainty Mounts