US inflation surges to 3.3% as Iran war impact bites
US inflation jumped in March during the US-Israel war with Iran, with prices rising 0.9% from February and 3.3% year over year, data released Friday showed. The consumer price index posted its largest increase in nearly two years and provides the first official measure of how the conflict has affected prices, particularly after Iran blocked the Strait of Hormuz, a route for about a fifth of global oil and gas.
Energy prices rose 10.9%, driven by a 21.2% increase in gasoline, which accounted for nearly three quarters of the monthly rise. Airfares rose 2.7% in March and were 14.9% higher than a year earlier. Core inflation, which excludes food and energy, rose 0.2% on the month and 2.6% over the year.
Annual inflation had not exceeded 3% since summer 2024, after peaking at 9.1% in June 2022. It fell to 2.3% last April, rose to 3% by September, then eased to 2.4% in January and February. The Iran war has added to uncertainty that began with Donald Trump’s tariffs last year.
Oil prices fell after Trump announced a two week ceasefire and Iran agreed to reopen the strait, but remain elevated, with US crude still about 10% above pre conflict levels and nearly 30% higher since the start of the year.
Producers are also under pressure. Fourth quarter 2025 GDP was revised down Thursday from 1.4% to 0.5%.
The prices index in the Institute for Supply Management survey rose from 63 in February to 70.7 in March, the largest one month increase in 13 years.
Consumer confidence is falling. The University of Michigan survey dropped 10.7% to its lowest level on record. Director Joanne Hsu said many consumers blame the Iran conflict for worsening conditions.
The labor market remained resilient, with 178,000 jobs added in March and unemployment falling to 4.3%.
