US CPI Surges 0.9% in Largest Monthly Jump Since 2022 on Gas

Shoppers in San Francisco, California. Photographer: David Paul Morris/Bloomberg Photo by David Paul Morris /Bloomberg

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(Bloomberg) — US inflation surged in March by the most in nearly four years as the war with Iran sent gasoline prices skyrocketing.

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The consumer price index rose 0.9% from February, according to data out Friday. From a year ago, it picked up to 3.3%, the strongest pace since 2024.

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A record increase in gas prices was responsible for nearly three-quarters of the monthly advance, the Bureau of Labor Statistics said. Another measure that excludes food and energy costs increased at a slower 0.2% pace.

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The data underscore how the war in the Middle East is beginning to ripple through the US economy, worsening the affordability woes many households have faced in recent years. Americans are already experiencing higher prices at the pump, and service providers including Delta Air Lines Inc. and the US Postal Service have warned of price hikes ahead.

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Even if the US-Iran truce holds and there’s a rapid resolution to the conflict, economists anticipate higher costs are likely to persist in the near term as oil output normalizes. Beyond the energy shock, a disruption in the supply of fertilizer is expected to eventually lead to higher grocery bills, while rising transportation costs could impact all kinds of consumer goods.

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“Looking ahead, we expect a similarly sized rise in headline CPI in April,” Kathy Bostjancic, the chief economist at Nationwide, said in a note after the release. “Even if a long-lasting deal to end the war is reached and the Strait of Hormuz is fully re-opened, it would take months for oil, gasoline, diesel and other commodity supplies to snap back to pre-war levels.”

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S&P 500 futures remained higher on the day, and the dollar fell. 

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Goods, Services

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Despite the 21% rise in gas prices, increases in other categories were relatively tame in March. The prices of goods excluding food and energy, a category economists and policymakers have been watching closely to gauge the impact of President Donald Trump’s tariffs, rose a modest 0.1% for a second month. Used-car prices fell for a fourth straight month, though prices for new cars and apparel rose.

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Grocery costs fell 0.2% on a decline in meat, dairy and egg prices. Bloomberg Economics estimates it could take as long as a year for higher fertilizer costs to impact the CPI.

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Services costs excluding energy rose 0.2% in March. Airfares rose 2.7% from February as some customers rushed to lock in prices before they jump further as the war pushes the cost of jet fuel higher. United Airlines Holdings Inc. recently warned it may have to hike prices by 20% because of the oil shock.

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Another services gauge Federal Reserve officials watch closely, which strips out housing and energy costs, also rose 0.2%, the slowest pace this year. Shelter prices — which comprise the largest portion of the index — rose 0.3%.