U.S. inflation accelerated again in April, with the personal consumption expenditures price index rising 3.8% from a year earlier, its fastest pace in about three years. On a monthly basis, PCE prices increased 0.4%, slowing from 0.7% in March but still leaving inflation well above the Federal Reserve’s 2% target.

Energy was the main driver. Higher gasoline and oil prices, linked to disruptions around the Strait of Hormuz and the broader Iran-related conflict, pushed headline inflation higher and revived concerns about a renewed price shock. Core PCE, the Fed’s preferred underlying inflation gauge excluding food and energy, rose 3.3% year over year and 0.2% month over month, suggesting that inflation pressure is not limited to energy alone.

For markets, the report matters because it reduces the room for easier monetary policy. If inflation stays elevated, the Fed may have to keep rates higher for longer, or even consider a more hawkish path if price pressures broaden. Consumer spending still rose 0.5% in April, but higher energy costs and weaker income momentum could make household demand more fragile in the months ahead.