Prices in the United States jumped sharply in March, rising at the fastest pace in nearly two years.
The war with Iran pushed energy costs much higher and raised new questions about what the Federal Reserve will do next.
The Bureau of Labor Statistics said consumer prices rose 0.9% from February to March. Compared to a year ago, prices were up 3.3%, the biggest yearly increase since May 2024.
This was a big jump from February’s 2.4% rate. Higher energy costs tied to the Iran war and tariffs flowing into everyday prices were the main reasons.
Energy prices drove most of the increase. The BLS said the energy index rose 10.9% in March. Petrol prices alone shot up 21.2% and made up nearly three quarters of the total monthly rise.
The national average price of petrol went above US$4 per gallon for the first time in more than three years.
Economists had predicted a 0.8% monthly rise and a 3.1% annual rate, so the real figures beat both forecasts.
Shelter costs, airfares, clothing and new vehicles also went up. On the other side, medical care, personal care and used car prices fell slightly.
Core inflation, which leaves out food and energy, rose to 2.7% compared to a year ago that was up from 2.5% in both January and February, and the highest in five months.
The big question now is what the Federal Reserve does next. At its March meeting, the FOMC kept interest rates at 3.5 to 3.75%.
Seven of 19 members said they expected no rate cuts at all this year. The central bank had already raised its 2026 inflation forecast from 2.4 to 2.7% in its latest outlook.
Ryan Weldon, investment director at IFM Investors, warned that the March numbers may only show part of the Iran conflict’s real impact. He said higher oil prices would keep pushing up other costs in the months ahead.
For ordinary Americans, the takeaway is simple that living costs just got a lot more expensive, and there is no sign that things will get better any time soon.
