Inflation surged in March as the Iran war sent energy prices soaring
Americans had already been navigating persistent cost-of-living pressures before last month's energy shock
Justin Sullivan / Getty Images
The consumer price index climbed by a seasonally adjusted 0.9% in March, pushing the annual inflation rate to 3.3% thanks to a surge in energy costs from the U.S.-Israeli war against Iran. That was up from 2.4% inflation in February.
The energy index climbed 10.9% for the month, the Bureau of Labor Statistics said Friday, its largest monthly gain since September 2005. At 21.2%, the March rise in gasoline prices was the steepest since the series began in 1967 and alone made up close to three-quarters of March's total CPI gain. Fuel oil jumped 30.7%, its biggest monthly rise since February 2000.
Related Content
Strip out food and energy and the picture was calmer: The core index advanced 0.2% in March and 2.6% over the past year, according to CNBC, missing the Dow Jones consensus estimate on both measures by 0.1 percentage point.
Food prices were flat in March after rising 0.4% in February. Grocery costs fell 0.2% for the month, with declines in meats, poultry, fish, and eggs — the egg index dropped 3.4% — as well as cereals, dairy, and nonalcoholic beverages. Fruits and vegetables rose 1.0%. The food index is up 2.7% over the past 12 months.
Shelter costs increased 0.3% for the month and 3.0% from a year earlier. Airline fares rose 2.7% in March, and the apparel index gained 1.0%. Medical care commodities fell 1.0%, led by a 1.5% decline in prescription drugs.
Over the past 12 months, the energy index is up 12.5%, with gasoline 18.9% higher and fuel oil up 44.2%.
Americans had already been navigating persistent cost-of-living pressures before the March energy shock, with consumer prices roughly 26% higher than they were in December 2019. University of Michigan consumer sentiment fell to 55.5 in March, and a Bankrate survey found that 54% of Americans said they were saving less for emergencies because of inflation or rising prices.
A Bureau of Economic Analysis report released earlier this week showed that the core PCE price index — the Federal Reserve's preferred inflation gauge — stood at 3.0% year-over-year through February, before the Iran conflict's energy shock took hold. The Federal Reserve left interest rates unchanged at 3.5% to 3.75% at its most recent meeting.
The next CPI report, covering April 2026, is scheduled for release on May 12.