T he 12-month Consumer Price Index increase through March is 3.3 percent. This follows a 0.9 percent jump in the monthly index, the largest increase since June 2022. The surge was driven by a record 21.2 percent jump in gasoline prices, which pushed the national average retail gasoline price above $4 a gallon for the first time in more than three years. Other motor fuels, including diesel, and soared by a record 30.8 percent.
Related Brief 17h ago
inflation Gasoline price spikes lock in higher borrowing costs for 2026
Interest rate cuts are likely delayed for several months as inflation veers away from the Federal Reserve's 2% target. The Consumer Price Index rose 0.9% in March 2026, the largest monthly increase since June 2022. Gasoline prices jumped 21.2%, the largest spike on record, accounting for nearly three-quarters of that monthly rise. National average retail gasoline prices crossed $4 a gallon for the first time in over three years. Diesel prices increased 30.8%, the biggest gain since the government began tracking the category, while overall energy prices rose 10.9%, the sharpest climb since 2005. The annual inflation rate rose to 3.3% in the 12 months through March, up from 2.4% in February. Core CPI, excluding food and energy, increased 0.2% monthly and 2.6% annually. The price surges followed the U.S.-Israeli war with Iran, which closed the Strait of Hormuz and sent global crude oil prices more than 30% higher. The Federal Reserve's March meeting minutes indicate a growing number of policymakers believe rate hikes may be necessary if inflation remains entrenched.
These price increases were triggered by the US-Israeli war with Iran, which sent global crude oil prices surging more than 30 percent.
Related Brief 1d ago
inflation Oil Blockade Blockades Federal Reserve Rate Cuts
Annual inflation rose to 3.3% in March, a two-year high. This increase was driven by a sharp rise in costs for products impacted by an oil shortage. Energy prices jumped almost 12% from February to March. U.S. gasoline prices reached an average of $4.152 per gallon, a $1.17 increase since the start of the war. Airline fares increased 3.4% in March. These price increases followed the effective closure of the Strait of Hormuz by Iran during the U.S.-Israeli war with Iran, which began on Feb. 28. The closure blocked approximately one-fifth of the global supply of oil and natural gas. The Federal Reserve may be reluctant to lower borrowing costs.
While core CPI, which excludes food and energy, rose only 0.2 percent in March, economists expect the oil shock to broaden into services inflation. Higher costs for jet fuel and diesel are expected to raise airline fares and the cost of goods transported by road, as well as the prices of fertilizer and plastics.
Related Brief 1h ago
monetary policy Interest Rate Stability Masks a Market Sell-Off Triggered by Oil Inflation
The Dow Jones Industrial Average fell 1.6% to its lowest level since November, while the S&P 500 dropped 1.4% to its same same level. The Nasdaq Composite lost 1.5%. These losses occurred after the Federal Reserve concluded a policy meeting on March 18 and maintained interest rates at current levels. The sell-off was driven by inflation measures that exceeded analyst expectations. Investors responded by selling bonds, which pushed the 10-year U.S. note yield to 4.26%. Fed Chair Jerome Powell cited uncertainty from the war in Iran as a reason for the stability of rates. Brent crude oil closed at $105 a barrel, up nearly 6%, and the nationwide average for a gallon of gas reached $3.86. The VIX Composite spiked nearly 10%.
Firming inflation has led economists to believe the Federal Reserve will not reduce borrowing costs this year.
Related Brief 1d ago
consumer price index Energy Price Spikes Push March Inflation to 3.3%
The annual inflation rate reached 3.3% in March, the steepest rise since June 2022. This spike followed a 0.3% increase in February. The Consumer Price Index rose 0.9% in March, falling slightly short of the 1.0% market expectation. The acceleration was driven by the energy index, which rose 10.9% in March, led by a 21.2% rise in gasoline prices. These costs increased as the Trump Administration entered a conflict with Iran, which drove up international energy commodity prices. Core inflation, which excludes food and energy, rose 0.2% monthly and 2.6% annually. Federal Reserve Chair Jerome Powell stated that long-term inflation expectations remain – anchored – even as the benchmark remains above the 2% target. The Federal Reserve may decide against additional rate cuts in 2026.
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