A key inflation gauge accelerated in April to the highest level in three years, the latest sign that spiking gas prices and higher food costs are squeezing Americans’ finances.

By Lucia Mutikani WASHINGTON, May 28 (Reuters) - U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices due to the Iran war and cementing economists' views that the Federal Reserve would hold interest rates unchanged well into next year.

A key inflation gauge accelerated in April to the highest level in three years, the latest sign that spiking gas prices and higher food costs are squeezing Americans’ finances. A look inside the Army’s new national data hub — built quietly in a Harford County office Angry Ferrari fans say the Italian company’s new EV is too Californian How are college grads navigating the tough job market?

New research shows that cheapflation may cause the prices of budget items to rise faster than premium brands, hitting lower-income households harder.

The combination of forces bearing down on the economy spells trouble for Republicans in the midterm elections.

The tech-heavy Nasdaq Composite and benchmark S&P 500 erased early declines Thursday and surged to fresh all-time highs, as monthly inflation data rose less than expected and oil prices headed lower.

The main inflation barometer preferred by Federal Reserve rose to a three-year high in April and it could rise even higher, posing a stiff challenge for households, businesses and the broader U.S. economy.

The same was the case for precious metals and the greenback which rose towards its current May peak before changing tack in the afternoon." Gina Bolvin, President of Bolvin Wealth Management Group, said today’s economic data underscores a “tougher balancing act” for policymakers and markets.

Americans continue to pay more for necessities, with inflation rising in April at a 3.8% annual rate. Gasoline spending rose by 28.8%, followed closely by housing and utilities up 22.7%. An inflation metric closely watched by the Federal Reserve showed prices rising at an annual rate of 3.