US April CPI year-over-year rose 3.8%, the highest in 32 months, as the Fed’s rate cut was pushed back again

The U.S. Bureau of Labor Statistics (BLS) released the April Consumer Price Index (CPI) on May 12: up 3.8% year over year, the highest since May 2023; up 0.6% month over month, in line with market expectations, but the year-over-year rate was higher than the expected 3.7%. According to a report by CNN Business, the energy prices contributed 40% of the month’s inflation increase, mainly driven by an oil price shock after the U.S.-led coalition took action against Iran at the end of February. The already trimmed Fed rate-cut expectations may be pushed back even further.

Data details: Core CPI accelerates, fresh fruits and vegetables post the biggest one-month rise in 16 years

April CPI key figures:

Headline CPI up 0.6% month over month, up 3.8% year over year (the prior March was around 3.5%)

Core CPI (excluding food and energy) up 0.4% month over month, up 2.8% year over year (March was up 0.2% month over month and up 2.6% year over year)

Energy up 3.8% month over month, accounting for 40% of the overall April CPI increase

Fresh fruits and vegetables up 2.3% month over month, the biggest one-month gain in 16 years for that category, mainly due to higher refrigerated transport diesel costs

Rent/housing up 0.6% month over month, twice the pace of March (partly due to data-collection adjustments caused by the government shutdown in the prior year)

A more critical signal is “real wages turning negative”—the average hourly earnings growth for April, after adjusting for annualized inflation, first moved into negative territory, the first time since April 2023. For workers’ purchasing power, wage growth is no longer enough to keep up with inflation.

Market reaction: Dow futures fall, 10-year yields rise to 4.43%

After the CPI release, stock index futures quickly retreated: Dow futures fell 18 points, S&P 500 futures fell 0.3%, and Nasdaq 100 futures fell 0.75%. The yield on the 10-year U.S. Treasury rose to 4.43%, reflecting the market’s repricing of the Fed path.

CME FedWatch shows that futures traders expect the Fed to not cut rates at all throughout 2026. Previously, Wall Street analysts including Goldman Sachs and Bank of America had both lowered their forecasts for the number of cuts this year.

The core driver behind the rise in this CPI is energy (40%)—after the U.S.-led coalition took action against Iran at the end of February, oil prices surged multiple times, and they did not stabilize in April. In related CNBC reporting, U.S. crude has returned to above $100, and Brent has been hovering around $103, while the Iran ceasefire agreement is “precarious.” Until crude prices clearly fall, energy-driven inflation is expected to remain the dominant variable for subsequent CPI.

Signals for crypto and safe-haven assets

Chain News observation: In a high-inflation environment where rate cuts are delayed, the impact on the crypto market is two-sided. On one hand, keeping interest rates at high levels typically suppresses valuation for speculative risk assets. On the other hand, “purchasing power eroded by inflation” is the long-standing thesis supporting safe-haven assets such as BTC and gold; with the indicator of real wages turning negative, it further reinforces the narrative about the opportunity cost of holding U.S. dollar cash.

BTC has been trading in a range around $80k; after this CPI data, it may face short-term pressure to follow equities lower. But in the medium to long term, if the Fed is forced to stay hawkish, that could actually provide renewed momentum for the “BTC as an inflation hedge” theme. Investors need to distinguish between two lines: short-term stock-and-bond correlation versus long-term monetary narratives.

Events worth tracking next include whether the tone of multiple Fed officials’ remarks changes before the end of May, the updates to the dot plot at the June FOMC meeting, progress on the U.S.-Iran ceasefire and the direction of oil prices, and President Trump’s public response to the CPI data and the Fed path.

This article, “U.S. April CPI rises 3.8% year over year to a 32-month high, and Fed rate cuts are delayed again,” was first published on Chain News ABMedia.