U.S. consumer prices jumped sharply in March as energy costs soared in the wake of the Iran conflict, pushing the annual inflation rate to its highest level in nearly two years, the Labor Department reported Friday.
The Consumer Price Index for All Urban Consumers rose 0.9% in March after a 0.3% gain the previous month, the Bureau of Labor Statistics said. Over the 12 months through March, the index climbed 3.3%, up from 2.4% in February.
Energy prices led the increase, surging 10.9% for the month — the biggest gain since September 2005. Gasoline alone jumped 21.2%, the largest monthly rise since the series began in 1967, and accounted for nearly three-quarters of the overall CPI advance. Fuel oil rose 30.7%, its biggest monthly increase since February 2000.
The energy shock came as the Iran conflict, which began on February 28, disrupted oil flows through the Strait of Hormuz. Brent crude climbed from about $73 a barrel before the fighting to $95.88 by Friday morning. Nationwide average gas prices hit $4.15 a gallon on April 10, up nearly 40% since late February, according to AAA.
Core inflation, which excludes volatile food and energy costs, rose a more modest 0.2% in March and 2.6% over the past year. That was slightly below economists’ forecasts.
Food prices were unchanged for the month. The index for food at home fell 0.2%, while food away from home rose 0.2%. Shelter costs increased 0.3%. The report follows a two-week ceasefire between the U.S. and Iran announced on Tuesday. Energy analysts said it could eventually ease prices at the pump, but any decline would take weeks.
Economists warned that the energy spike could soon ripple into other areas. Heather Long, chief economist at Navy Federal Credit Union, said in an email, “This is only the beginning. Food prices, travel, and shipping costs are all going up in April and will exacerbate the pain,” CBS News Texas reported.
Raymond James chief economist Eugenio Aleman said the Federal Reserve is likely to look past the headline jump.
“As long as the increase in gasoline prices is not translating into an increase in the core measures of inflation, then the Fed is probably not going to react to the noise in the headline measures of inflation,” he said in an email, CBS reported.
The central bank holds its next meeting on April 28-29. It kept its key interest rate steady at 3.5%-3.75% in March and has signaled it will remain patient while monitoring any lasting effects of the conflict.
White House spokesman Kush Desai called the surge a short-term disruption.
“As the administration ensures the free flow of energy through the Strait of Hormuz, the American economy remains on a solid trajectory thanks to the Administration’s robust supply-side agenda of tax cuts, deregulation, and energy abundance,” he said, per The New York Times.
The not-seasonally-adjusted CPI-U rose 1.0% in March to 330.213. The index for urban wage earners and clerical workers also climbed 3.3% over the year. October and November 2025 figures remain unavailable because of a lapse in appropriations.
Analysts said the March data captured the initial conflict-driven surge in commodity prices, but the tenuous ceasefire has already pulled oil prices back from peaks above $110 a barrel. Still, they cautioned that April’s report could show lingering effects.
