U.S. inflation jumped in March
U.S. consumer prices rose sharply in March, the biggest monthly gain in nearly four years, driven largely by a record increase in gasoline and diesel costs as the Iran war fed through energy markets. Markets tried to look through the report — futures were mildly positive — but the composition (fuel, airfares, staples like coffee) suggests the shock is concentrated in specific sectors, not uniform across the economy. (reuters.com) (nytimes.com)
March was the kind of inflation report that makes one part of the economy look like it hit a pothole. The Consumer Price Index rose 0.9 percent in one month, up from 0.3 percent in February, which was the biggest monthly jump since June 2022. (bls.gov) Most of that jump came from energy, not from a broad wave of price increases across everything people buy. The energy index rose 10.9 percent in March, and gasoline alone jumped 21.2 percent, accounting for nearly three quarters of the monthly increase in the overall index. (bls.gov) That is why traders did not read this report the same way they would read a hot rent-and-wages report. Federal Reserve Chair Jerome Powell said on March 18 that central bankers can sometimes “look through” an energy shock if longer-term inflation expectations stay anchored, even though oil spikes can push near-term inflation higher. (federalreserve.gov) The cleaner way to see that split is to strip out food and energy and look at the rest. Core consumer prices rose 0.2 percent in March and 2.6 percent over 12 months, which is much cooler than the 0.9 percent monthly headline number and the 3.3 percent annual all-items rate. (bls.gov) Even inside the March report, the pain was clustered in places that use fuel directly or buy it every day. Airline fares rose 5.3 percent in March, motor vehicle insurance rose 0.6 percent, and coffee rose 1.8 percent, while used cars and trucks fell 0.7 percent and medical care services fell 0.2 percent. (bls.gov) Shelter, which includes rent and the imputed cost of owning a home, did not suddenly reaccelerate. Shelter rose 0.3 percent in March, the same category that had been one of the stickiest parts of inflation over the last two years, so this report was not mainly a housing story. (bls.gov) The annual number still moved the wrong way. Consumer prices were up 3.3 percent from March 2025, while the annual energy index was up 13.3 percent and the annual food index was up 3.0 percent. (bls.gov) That leaves the Federal Reserve with the same awkward choice it had before, only with more expensive oil. In its March 18 projections, the central bank still expected inflation measured by personal consumption expenditures to run 2.7 percent in 2026, above its 2 percent target, even before the full March energy shock showed up in the data. (federalreserve.gov)
