Higher prices for diesel fuel to boost overall inflation
San José, CA – On Tuesday, April 28, the average price of gasoline rose to a four-year record high, up 41% since the beginning of the U.S.-Israeli war on Iran that began February 28. According to the American Automobile Association, the average price of diesel fuel nationwide was $5.46 that day, up 47%, even more than gasoline.
While the United States produces more diesel fuel than it consumes, the difference is exported. With prices of diesel fuel much higher in many countries, this can pull up the prices of diesel fuel here in the United States.
The price of diesel has not had much of an impact on consumer prices, which rose almost 1% in March over February and 3.3% from a year earlier. But many businesses use diesel fuel for their trucks, farm equipment and construction equipment. Big corporations have begun to increase their prices to try to offset this. For example, the fuel surcharge for UPS rose to 27%, up from 21% before the war started.
But smaller businesses, like independent truckers, are often not able to do this. This means that their margins and income are cut, or they drive less, again cutting their revenue. Small farmers are also feeling the squeeze, not only with diesel prices, but prices of fertilizer are also up.
These higher costs will trickle up to consumers. While there was scant evidence of this in March, some price increases are likely in April and even more after that. While a big part of Trump’s election campaign in 2024 was him saying he was going to fight inflation, his tariff increases that began on so-called “Liberation Day” in April 2025, and then the war on Iran, have already pushed the Consumer Price Index to the highest rate since Trump took office.