Searing U.S. energy prices are driving the hottest inflation in years

MoneyWatch Searing U.S. energy prices are driving the hottest inflation in years .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Mary Cunningham Mary Cunningham Reporter, MoneyWatch Mary Cunningham is a reporter for CBS MoneyWatch. She previously worked at "60 Minutes," CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program. Read Full Bio Mary Cunningham May 12, 2026 / 4:19 PM EDT / CBS News Add CBS News on Google The global oil supply shock stemming from the Iran war is scorching U.S. motorists and other consumers, new federal data makes clear. Higher energy prices accounted for 40% of the total jump in inflation in April, when the Consumer Price Index surged at an annual rate of 3.8% — the fastest increase in nearly three years. The index for gasoline prices last month was up more than 28% from a year ago, the Department of Labor found. Overall energy costs — which includes gas, heating oil and electricity — last month rose nearly 18% from a year ago. For millions of workers, the spike in prices over the last two months means inflation is now outpacing wage growth, Wall Street analysts noted."That is a very clear illustration of the impact that higher energy prices are having in squeezing households' real wages," Brian Coulton, chief economist at Fitch Ratings, said in an email, warning that headline inflation could top 4% by the time the government releases the next CPI report in early June if oil prices remain elevated.A gallon of gasoline around the country now costs an average of $4.50, up more than $1.50 since the war started, according to AAA. And in a forecast on Tuesday, the U.S. Energy Information Administration estimated that retail gas prices will average $3.88 per gallon over the rest of the year and $3.62 per gallon in 2027. Before the Middle East conflict erupted in February, the national average for a gallon of gas hovered ju...