By the Arkansas Black Vitality Staff

LITTLE ROCK – May 12, 2026 – Inflation is heating up again across the country — and Arkansas families are feeling the burn at the gas pump more than most.

New federal data released Tuesday by the U.S. Bureau of Labor Statistics (BLS) show that consumer prices rose 0.6% nationwide in April, driven largely by a sharp spike in energy costs. Over the past year, U.S. inflation climbed 3.8%, the fastest annual increase since early 2024, according to the BLS’s monthly Consumer Price Index.

But in the BLS’s South Region, which includes Arkansas and 16 other states, the picture is even more complicated. Prices in the region rose 0.8% in April, outpacing the national monthly average. While the South’s year-over-year inflation rate of 3.6% is slightly lower than the U.S. overall, the categories hitting Arkansas households hardest — gasoline, transportation, and utilities — are rising faster here than anywhere else.

Compared to a year ago, the all-items index advanced 3.6% for the period ending April, after increasing 3% over the 12-month period ending March. The index for all items, excluding food and energy, rose 2.4% over the last 12 months. The energy index increased a whopping 17.9% for the 12 months ending April, while the food index rose 3% year-over year.

According to Bank of America Securities’ Global Research team, the spike in U.S. inflation in April can be attributed to the war in Iran’s impact on gasoline prices. “With gas taking another leg up in May so far, there might be another sizeable pickup in headline inflation in the pipeline. The impact of the war can also be seen in airfares, which were up 2.8% compared to last month,” said BofA economist Stephen Juneau.

U.S. “inflation basket” jumps 1.5% in March and April

Nationally, inflation increased 0.6% on a seasonally adjusted basis in April, after rising 0.9% in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.8 % before seasonal adjustment.

In the inflation basket, the energy index rose 3.8% in April, accounting for over 40% of the monthly all-items increase. The shelter index also increased in April, rising 0.6 %. The index for food increased 0.5 % over the month as the index for food at home rose 0.7% and the index for food away from home increased 0.2%.

The index for all items, excluding food and energy, rose 0.4% in April. Indexes that increased over the month include household furnishings and operations, airline fares, personal care, apparel, and education. Conversely, the indexes for new vehicles, communication, and medical care were among the major indexes that decreased in April.

Energy and transportation costs soar upward

Like the regional energy index, the national rate also increased by 17.9% over the past 12 months, and the gasoline index rose a whopping 28.4%. The electricity index increased 6.1% over the last 12 months ending in April and the natural gas index rose 3%.

Additionally, new data from the Bureau of Transportation Statistics (BTS) show that transportation costs are now among the biggest drivers of inflation nationwide, up 7.1% from a year ago. Transportation alone accounted for 31.1% of all U.S. inflation over the past year — a striking figure, given that it represents only a portion of the consumer spending basket.

The biggest culprit, of course, is gasoline. Prices for gasoline and other fuels surged 28.4% year‑over‑year, contributing 24.2% of the entire annual increase in the Consumer Price Index. No other category came close, but airline fares also surged upward by 4.9%, primarily because of skyrocketing jet fuel costs. According to Argus, daily jet fuel spot prices in Chicago, Houston, Los Angeles and New York, the nation’s largest cities, averaged $4.13 a gallon on May 12.

According to AAA, drivers are seeing another sharp increase at the pump, with the national average for a gallon of regular gasoline rising 25 cents for the second consecutive week to $4.55. Pump prices are now $1.40 higher than they were a year ago and have reached their highest level since 2022, when the national average peaked at $5.01 per gallon.

While crude oil prices dipped below $100 per barrel amid ongoing negotiations to reopen the Strait of Hormuz, gasoline prices continue to face upward pressure from global supply concerns. Patrick De Haan, head of petroleum analysis at GasBuddy, said optimism surrounding a potential U.S.-Iran trade and diplomatic agreement briefly eased concerns over global supply disruptions.

Early last week, markets grew increasingly hopeful that negotiations could lead to a de-escalation in tensions and a reduction in risks tied to critical oil infrastructure and shipping routes, helping pull crude prices sharply lower from their recent highs. That optimism, however, faded over the weekend as developments suggested the prospects for a near-term agreement may be dimming once again.

Meanwhile, renewed uncertainty surrounding negotiations and the potential for further escalation helped push oil prices higher at the start of the week. In early Monday trade on the New York Mercantile Exchange, WTI crude oil was up $2.95 per barrel to $98.37 per barrel, though still below last week’s $105.33 level. In London, Brent crude rose $3.07 to $104.36 per barrel, also down from $112.03 per barrel a week earlier.

With talks appearing to stall and President Trump signaling the latest proposal is unacceptable, DeHaan predicted gasoline prices will rise even higher over the next few weeks, leading up to the Memorial Day holiday, which is traditionally the beginning of the nation’s summer driving season.

As a result, many states could see another round of price cycling in the days ahead, potentially sending the national average toward the $4.65-per-gallon mark if oil continues climbing,” said DeHaan. “Should geopolitical tensions escalate further, fuel prices could rise even more sharply in the weeks ahead.”

Wall Street now reneging on 2026 interest rate hikes

Meanwhile, even after the Senate on Tuesday voted to clear the way for President Trump’s nominee, Kevin Warsh, to take the reins at the Federal Reserve, Wall Street is now betting that the U.S. will not cut interest rates until 2027. In a recent research report, BofA economist Aditya Bhave pulled back his forecast for two rate cuts this year because “inflation is stuck well above” the Fed’s Open Market Committee’s 2% target.

Bhave’s updated forecast follows Warsh’s confirmation to the Federal Reserve Board of Governors by the Senate on Tuesday. The Senate chamber voted 51-45 to confirm Warsh to a 14-year term as one of the Fed’s seven governors. However, the 100-member body still needs to vote separately to confirm Warsh as chair of the Board of Governors, replacing Jerome Powell, whose four-year term as chair ends Friday.

On April 29, Powell and FOMC policymakers voted to leave the benchmark federal funds rate at its current range of 3.5% to 3.75%. Powell reasoned that “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” 

Even if Warsh is confirmed as chair ahead of the next FOMC meeting, Bhave said President Trump’s nominee will likely have trouble pushing through another rate cut this year after three earlier 25-basis-point rate cuts at the end of 2025.

“We no longer expect the Fed to cut rates this year. We have pushed the two cuts in our forecast out from Sep-Oct ’26 to Jul-Sep ’27,” said Bhave. “We think Warsh will push for lower rates, but the data flow precludes cuts for now. However, cuts should be in play by next summer, with inflation much closer to target.

Besides Bank of America, Goldman Sachs analyst David Mericle also said on Monday that the Wall Street giant is delaying its final two forecast rate cuts by one quarter, now expecting reductions in December 2026 and March 2027. The FOMC’s next policy meeting is scheduled for June 16-17.