Gasoline Prices Drive Inflation to Highest Level in Two Years

SPEAKER_1 (0:06)

As a chef, I know flavor doesn't begin in the kitchen. It begins on the land. And West Home's nature-led Australian Wagyu is a story written in the landscape of Northern Australia. Cooking is storytelling, and West Home Wagyu carries a story of Northern Australia itself. Raw, powerful, and deeply authentic. It's a testament to the passion and care raised in the rhythm of Northern Australia. I'm Chef May Lin from ADA Club in Los Angeles, and I invite you to visit westhome.com/maylin to learn more. And taste the story only West Home nature-led Australian Wagyu can tell. That's westholme.com/m-e-i-l-i-n.

Alex Ossola (0:53)

Inflation rises to its highest level in two years. Plus, Iran is holding strong cards ahead of peace talks with the US this weekend in Pakistan.

Laurence Norman (1:02)

So, the Iranians' biggest leverage now is their control of the Strait of Hormuz. That is a huge economic problem for the rest of the world. And it's going to be pretty difficult to wrest control from Iran militarily.

Alex Ossola (1:17)

And the astronauts that saw the far side of the moon prepare for the toughest part of their mission. It's Friday, April 3rd. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

First up on today's show, the promise of a presidential pardon. We're exclusively reporting that President Trump has repeatedly said he will grant pardons to his top administration officials before he leaves office. That's according to people who have heard his comments. In a recent meeting, he said he'd pardon everyone who quote, has come within 200 feet of the Oval. Several aides said Trump raises the pardon so regularly that some of his advisors now laugh about it. White House Press Secretary Caroline Levitt said quote, The Wall Street Journal should learn to take a joke. However, the president's pardon power is absolute. New data out from the Labor Department today showed that consumer prices rose 3.3% last month from a year earlier. That's much hotter than February's 2.4% gain and the highest reading in two years. Journal Economics reporter Konrad Putzier explains how that's tied to the war in Iran.

Konrad Putzier (2:29)

The March inflation report was pretty bad. The reason of course is the Iran War and the rice and energy prices, gasoline prices, heating oil prices, and that's a problem for consumers. They've been upset about the high cost of living for years. There were signs that things were maybe getting better and now they're actually getting worse. Another big risk here is that we're only seeing the beginning of the energy impact on inflation. Farmers use fertilizer to grow their food and fertilizer is made from natural gas. Then they use diesel powered trucks to transport that food to stores. If energy costs stay really high, you might get more food inflation and you might get more services inflation, and your taxi ride might cost more money. So all those risks are there and we haven't really seen them yet in this inflation report, but that doesn't mean we won't see them going forward.

Alex Ossola (3:17)

Konrad says surging prices are hitting people's wallets.

Konrad Putzier (3:20)

Inflation is now so high that it basically ate up wage increases of Americans of the past year. That's a big deal because it basically means Americans aren't really better off than they were a year ago, unless they own stocks. But this month's report was actually somewhat good news for lower income households because rent growth was somewhat benign because food inflation so far was fine.

Alex Ossola (3:41)

But Konrad says it might not change much for the Fed.

Konrad Putzier (3:45)

A lot of this depends on how long the shock will last. This is a brief blip. Prices go up and then they come down again. It's not really going to be a problem. If this is a sustained situation, the price of energy keeps rising. This becomes a tricky situation for the Fed, right? Because on the one hand, you have higher inflation. But on the other hand, you have consumers that are being squeezed by all this. And that means they're spending less in all likelihood, and that hurts the economy. A lot of the economists I talk to actually think that if this drags on, that might actually make it more necessary to stimulate the economy by lowering interest rates.

Alex Ossola (4:15)

That was economics reporter Konrad Putzier. And a separate piece of data shows that consumers are worried about the Iran war affecting the US economy. The University of Michigan's Consumer Sentiment Measure fell this month to the lowest level in over 70 years. The US and Iran are gearing up for high-stakes talks in Islamabad, Pakistan tomorrow. The negotiations would be the highest level direct talks between the US and Iran since the 1979 Iranian Revolution. This morning, as the US delegation set off, Vice President JD. Vance told reporters that the president had given guidelines for the discussions.