WASHINGTON– U.S. inflation took a leap during March as the energy shock stemming from the war in Iran was felt across the economy..
The Consumer Price Index report inflation increased 3.3% over one year earlier, , almost a full percentage point increase from February’s annual pace of 2.4%, according to the Labor Department.
Overall prices rose 0.9% over the course of March, the highest monthly gain since June 2022.
“CPI inflation reached a two-year high in March due to a surge in energy prices. Markets are optimistic that the worst is behind us, but there is still significant uncertainty on a number of fronts,” Curt Long, chief economist with America’s Credit Unions said in a statement. “Even aside from the main geopolitical outcome in the Middle East, it remains unclear how quickly producers can recover supply that has been taken offline. Another risk is that a large portion of the elevation in energy prices could pass through to core inflation. FOMC members are understandably cautious about ‘looking through’ this episode, and a rate cut is unlikely in the near term. As consumer concern over affordability continues to ratchet up, credit unions provide needed relief by offering the best rates and lowest prices for financial services.”
Additional Increases
The data further show prices excluding food and energy categories—the so-called core measures of inflation—rose 2.6%, slightly below forecasts for a 2.7% increase.
Not surprisingly, energy prices jumped by 12.5% from a year earlier, a significant acceleration from 0.5% in February. Gasoline prices jumped 18.9% and fuel oil surged by 44.2%.
The cost of transportation services, which is affected by fuel costs, rose 4.1% from a year earlier in March, a much faster increase than in February, the Labor Department said.
Other Data Points
Other data points in the newest report include:
- Used-car prices fell by 3.2% from a year earlier
- The cost of groceries increased at a slower annual pace than in February.
- Annual shelter inflation remained unchanged at 3.0%.
- Apparel prices rose by 3.4% in March from a year earlier, a faster pace than February’s increase of 2.5%.
- Airline fares surged by 14.9% year over year.
Earnings Decline
The CPI data and Labor Department analysis also reveal that prices took a bite out of household finances, with average weekly earnings falling by 0.9% in March from February after adjusting for inflation, and were up just 0.2% from a year earlier.
