Inflation jump + tariffs

U.S. inflation accelerated to 3.3% in March after a gasoline shock pushed consumer prices sharply higher. (bls.gov) The Consumer Price Index rose 0.9% in March from the prior month, up from a 2.4% annual rate in February. Energy prices jumped 10.9% in March, and gasoline alone surged 21.2%, accounting for nearly three-quarters of the monthly increase, the Bureau of Labor Statistics said. (bls.gov) Strip out food and energy, and core inflation was 2.6% over 12 months and 0.2% for the month. Shelter rose 0.3% in March, food was unchanged, and medical care, personal care, and used cars and trucks posted declines. (bls.gov) That split matters because it shows two price pressures hitting households at once: an energy spike tied to the U.S.-Iran war and a slower tariff effect showing up in goods. CNBC reported the March inflation jump was the highest since April 2024, even as underlying inflation stayed relatively contained. (cnbc.com) Tariffs work like a tax at the border, and economists track “pass-through” to measure how much of that tax ends up in retail prices. A Federal Reserve note published in 2025 found that U.S. import tariffs in both 2018-19 and early 2025 led to statistically significant increases in consumer goods prices. (federalreserve.gov) The Budget Lab at Yale estimated that imported core goods and durable goods prices each rose 1.5% during 2025 through January. Its implied pass-through estimates ranged from 46% to 86% for core goods and 51% to 115% for durable goods, depending on the method used. (budgetlab.yale.edu) A National Bureau of Economic Research digest published in April said researchers estimated pass-through rates of 80% for the 2018-19 tariffs and 94% for the 2025 tariffs. In that research, foreign exporters generally did not cut prices enough to absorb the tariff, so U.S. importers bore most of the cost. (nber.org) The refund fight adds another layer. After the Supreme Court struck down most tariffs imposed under the International Emergency Economic Powers Act on February 20, 2026, the Court of International Trade ruled on March 5 that importers who paid those duties are entitled to refunds. (cbsnews.com) Those refunds go to the “importer of record,” not automatically to shoppers who paid higher shelf prices. CBS News reported that companies including Bausch & Lomb, Dyson, FedEx and L’Oréal have sued for refunds, while FedEx said it would refund customers if it is repaid. (cbsnews.com) The result is a March inflation report that looks like an oil shock on the surface and a tariff story underneath. One raised prices fast at the pump, and the other has kept pressure on imported household goods even as the legal fight over tariff refunds moves into court. (bls.gov)