🇺🇸 US Inflation Report Released

⛽Gasoline Prices Show Largest CPI Increase Since 1967, and Headline Inflation Rises to 3.3%
The U.S. Bureau of Labor Statistics released its March CPI report Friday, confirming the first full month of energy-related impact from the U.S.-Israel-Iran war. The data shows American consumers have absorbed the sharpest energy-related inflation shock in nearly sixty years.
Changes:
➡️ Gasoline prices rose 21.2% month-on-month – the largest monthly increase since BLS began regularly tracking the series in 1967
➡️ Other motor fuels, including diesel, rose 30.8% month-on-month, a record
➡️ Gasoline accounted for almost three-quarters of the monthly CPI increase
➡️ Headline CPI rose 3.3% year-on-year in March, up from 2.4% in February – the highest level since May 2024
➡️ On a monthly basis, CPI rose 0.9% in March, up from 0.3% in February
➡️ Energy costs rose 21% year-on-year, with fuel oil rising 31%
➡️ Core CPI rose 2.6% year-on-year as food and housing slowed, slightly below the 2.7% forecast
➡️ National average gasoline price was 11 In April, it reached $4.15/gallon for the first time, showing a decline since mid-February, but still rising by $1.17 since March 1.
Details:
The inflation data was the first to fully reflect the global energy crisis triggered by the war in the Middle East. The de facto closure of the Strait of Hormuz caused crude oil prices to rise by more than 30%, which directly impacted gasoline prices across the country.
Gasoline prices rose above $4 for the first time in more than three years. The national average reached $4.17 on Thursday, its highest level since August 2022.
Beyond fuel, transportation services rose 4.1% year-on-year, while airline fares increased 14.9% year-on-year; both impacted by energy costs. Used car prices fell 3.2%, and food inflation slowed, helping to ease core inflation.
Market and political repercussions:
“The war in Iran is now clearly visible in the economic data and paints a grim picture,” wrote Heather Long, chief economist at Navy Federal Credit Union.
Consumer confidence fell to a record low this month amid expectations that the Iran war will fuel inflation. The White House characterized the rise as “short-term disruptions” stemming from “Operation Epic Fury,” noting that prices for eggs, beef, dairy, and prescription drugs have fallen or remained stable.
Markets were mixed on Friday: the Dow and S&P 500 were in the red, the Nasdaq rose, and Treasury yields edged higher.
Economists are warning of a “rockets and feathers” dynamic – prices rise rapidly but fall gradually. Even if the March increase was temporary, high energy prices could persist in the coming months.
The Fed dilemma:
The report complicates the Federal Reserve’s path. It typically raises interest rates to contain inflation, but the economy is also slowing. The Fed now has to weigh sticky inflation against the growth risks stemming from the energy shock.
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