US inflation surges to 3.8%, threatening Fed's rate-cut plans

The Consumer Price Index jumped 50 basis points in a month, rising to 3.8% year-over-year in April 2026 from 3.3% in March, the BLS reported May 12. At nearly double the Fed's 2% target, the re-acceleration compels policymakers to shelve near-term easing. Markets now face repricing risk; any sustained monthly inflation above 0.5% will keep the annual rate elevated through summer, tightening the Fed's policy latitude.