Consumer prices in March saw the largest monthly gain since 2022 as the US-Israel war against Iran sent gas prices skyrocketing past $4 a gallon.
Headline Consumer Price Index (CPI) inflation clocked in 3.3% higher than a year ago while rising 0.9% on a monthly basis in a rapid acceleration from February’s levels, according to Labor Department data released Friday. Economists surveyed by Bloomberg had anticipated a 3.4% increase from a year ago and 0.9% from a month prior.
The spike was almost entirely driven by a rise in energy costs as the war left the vital Strait of Hormuz largely closed. The gasoline index alone soared 21.2%, which the Labor Department said accounted for almost three-quarters of the monthly gain and was the single-largest monthly increase since the government began tracking the series in 1967.
Read more: March CPI breakdown: Iran war sends gas prices skyrocketing, airfare climbing
“We’re kind of living through a whiplash economy,” New Century Advisors chief economist Claudia Sahm told Yahoo Finance.
And more pain might be on the way, with March’s print only showing the earliest impacts of the war.
“The market was braced for a hot print, so today’s inline number is a slight relief,” said Alexandra Wilson-Elizondo, multiasset solutions global co-head at Goldman Sachs Asset Management. “However, it may be the best headline inflation number we see for a while as it may only partially capture the full force of the Iran conflict, which sent US crude and US gas up 70% at peak.”
Airfares increased 2.7% from February’s levels. The index for food, meanwhile, remained flat, though price movements were uneven across detailed categories: tomatoes rose 15.3% on the month, while hot dogs slid 3.6%.
Read more: Your flight is about to get more expensive. These tips could save you.
On a “core” basis, which strips out volatile categories like food and energy, prices rose by 0.2% from February’s levels and 2.6% from a year ago. Economists had expected increases of 0.3% and 2.7%, respectively.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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