US consumer prices rose 3.8% annually in April 2026, the highest inflation rate in three years, driven primarily by surging energy costs tied to the Iran war. For the first time in three years, wage growth is no longer keeping pace with inflation, which means typical households are losing purchasing power — a paycheck that would have bought $100 of goods a year ago now buys roughly $96. The Trump administration is considering a pause on federal gas taxes to provide relief, but economists warn that sustained inflation of this magnitude could slow economic growth, particularly for lower-income households already bearing the heaviest burden.