CNN reporter: April inflation report is “another point of evidence here that the war in the Middle East is making the cost of living here in America worse”
CNN's Matt Egan: “Prices are now going up faster than paychecks. ... Real wages — inflation-adjusted wages — are falling for the first time since 2023.”
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From the May 12, 2026, edition of CNN's CNN News Central
SARA SIDNER (CO-ANCHOR): Breaking just moments ago, new data showing inflation rose in April more than expected, albeit just slightly. But it's eroding American spending power with things like prices and gas spiking at the same time. CNN's Matt Egan joining me now to break down the report. What does this tell us?
MATT EGAN (CNN SENIOR REPORTER): Well, Sarah, look, it's another point of evidence here that the war in the Middle East is making the cost of living here in America worse. And a lot of people, they can't keep up because prices are going up faster than paychecks.
So, consumer prices in April surging by 3.8% year over year. As you mentioned, that is worse than expected. And this is the highest annual rate since May of 2023. Now on a monthly basis, prices up by 0.6%. That was as expected. But again, that's hotter than you want to see. Now, this is a look at the trend for annual inflation going back for the past three years or so. And you can see inflation was heading in the right direction. And look at this, at the start of this year, just as the war began, inflation going almost straight up towards 4%.
Now, core inflation, which excludes food and energy. That's looked at as a better sign of underlying inflation. That's what the Fed, that's what investors look at. That also moved in the wrong direction. Core inflation heating up to 2.8%. That's the highest level since last fall. It's not surging like headline inflation, but it is going in the wrong direction.
So, why did this happen? Why is overall inflation going up? Well the obvious one here is gasoline, right? Gasoline prices surging on the month by more than 5%. That's a reflection of the fact that a lot of people are paying more than $4 a gallon, 4.50, in some cases, $5 a gallon for gasoline right now. But it's not just gas. Also airfare, right? Jet fuel prices have skyrocketed. In some cases, they have doubled. So, we've seen a significant increase in airfare. That's likely to continue.
Elsewhere, though, groceries. That's obviously a major point of frustration for people for years, grocery prices up by 0.7% on the month. That's the most since August of 2022. And that may be a reflection of also the war, because we've seen diesel costs go up. So that's making it more expensive for farmers, and to transport all the food to the stores. Fresh fruits and vegetable, related there, up by 2.3%. That's the most since 2010. Got to keep an eye on that, also could be related to diesel as well as some of the immigration crackdowns.
And then shelter. Shelter was up by 0.6%. That is a very big weight on this inflation report. We shouldn't read too much into that one, because that's likely a statistical anomaly. The government was shut down last fall. They didn't have a reading there. Now, they're playing some catch up. So that may have inflated the inflation readings a little bit. Exaggerated it.
But still, you put it all together, and you have a situation where prices are now going up faster than paychecks, right? And that's the first time that we've seen that, where real wages — inflation-adjusted wages — are falling for the first time since 2023. You look all the way on the left side of the screen. That's the red line is prices. Prices were going up faster than paychecks. Then you had this massive improvement. And for about three years, right? People's paychecks were going up faster than the cost of living. Not anymore. We've seen that crossover there. So look, bottom line, this is just more evidence of how the war in the Middle East and this energy crisis is making it more expensive for consumers.
SIDNER: It explains this new CNN polling, how people are feeling about the economy. And, you know, three-fourths of the population, just about, are saying it's not going well. This is why.
EGAN: Yeah, this is validation.
SIDNER: This is validation.