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Inflation rose sharply in April, driven largely by higher fuel prices following the start of the conflict with Iran. Nationally, the Consumer Price Index for All Urban Consumers (CPI-U) rose 3.8 percent from April ’25 to April ’26, up from March’s 3.3 percent reading. Locally, Houston’s index rose by 2.8 percent. While that marks a sharp increase from the previous reading of 1.3 percent in February, it remained a full percentage point below the national average. Outside of fuel, price pressures remained more contained. Annual core inflation (which excludes food and energy) came in at 2.8 percent nationwide and 1.5 percent in Houston.
At 3.8 percent, U.S. inflation is now at its highest rate in three years and above the 3.7 percent economists expected in a recent Wall Street Journal survey. Core inflation at 2.8 percent also came in slightly hotter than the forecasted 2.7 percent. This price pressure makes it less likely that the Federal Reserve will cut interest rates in ’26 and opens the door to the possibility of rate hikes later in the year if trade through the Persian Gulf remains closed.
A sharp rise in fuel prices is behind most of the headline increase. Though gasoline remains cheaper in Houston than in many other parts of the country, its price has increased 36.8 percent relative to April ’25. Apparel, food, home furnishings, and medical care each saw local prices rise faster than the national average on an annual basis. Still, the region outperformed the nation in several categories: prices for housing and recreation rose more slowly than they did nationwide; prices for new vehicles, alcoholic beverages, and education and communication services fell locally even as they rose nationally; and prices for used vehicles declined faster here than in the U.S. overall.
The next release of CPI data will be on Wednesday, June 10.
Colin Baker
Manager of Economic Research
[email protected]
