Inflation is no longer screaming. It is also not going away.

Headline CPI rose 3.8% year over year in April, the hottest reading since May 2023 and up from 2.4% as recently as January and February, according to the Bureau of Labor Statistics.

The chart tells the bigger story. Before the pandemic, 3% inflation mostly looked like the top of the range. Since the 2022 inflation shock faded, it has started to look more like support.

That does not mean the US is back in a 1970s-style inflation spiral. It does mean the old comfort zone has not returned.

The BLS said energy did much of the work in April, rising 3.8% on the month and accounting for more than 40% of the monthly increase in headline CPI. Energy prices were up 17.9% from a year earlier, while gasoline prices rose 28.4%. Food also rose 0.5% on the month, with grocery prices up 0.7%.

But Joe Brusuelas, chief economist at RSM, weighed in on Yahoo Finance Tuesday morning.

“The most important reading actually isn’t the CPI,” Brusuelas said. “It’s the real average hourly earnings, which are down 0.3% year over year.”

That turns the inflation story into a paycheck story.

Prices are still rising fast enough to pressure real wages, even as the stock market has continued to climb. Brusuelas said wage gains have been “clustered upmarket” among people more likely to own and invest in securities, leaving stocks “decoupled from the real economy,” while middle-class, working-class, and lower-income households absorb more of the hit.

RSM has been warning that this turn was coming.

In a note published ahead of the CPI release, Brusuelas wrote that a 3.6% increase in nominal wages would mean real wages had turned negative if top-line CPI came in around 3.7%.

RSM warned that the wage squeeze could get worse. Ahead of the CPI release, Brusuelas wrote that headline inflation could peak at 4.5% or higher if energy prices stayed elevated.

That is why the distinction between headline and “core” inflation gets harder to maintain once prices hit household budgets. Central bankers often focus on core measures that strip out food and energy. Consumers do not.

Food, gasoline, electricity, shelter, and transportation are not abstract categories. They are the recurring bills that decide whether paychecks stretch or shrink.

Brusuelas said services inflation, food, and transportation costs deserve close attention from here, especially if higher transportation costs begin bleeding further into the grocery basket.

He said services were “not a statistical anomaly” and warned that a forward-looking central banker would have little reason to argue for rate cuts if inflation proves sticky.