Iran war oil shock pushes US inflation to highest level in almost two years

By Alicia Wallace, CNN

(CNN) — A war-driven jump in gas prices helped push US inflation to 3.3% in March, marking the fastest annual pace in nearly two years, new Bureau of Labor Statistics data showed Friday.

On a monthly basis, prices rose 0.9%, triple the 0.3% pace seen in February, when inflation was 2.4%, the latest Consumer Price Index data showed.

Gasoline prices, which rose a record 21.2% during the month, accounted for nearly three-quarters of the overall monthly increase.

Economists had expected prices to jump 0.9% from the month before and for the annual rate to climb to 3.4%, according to FactSet.

“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,” said Alexandra Wilson-Elizondo, a global co-chief information officer at Goldman Sachs Asset Management. “With input costs globally surging to their highest levels since Covid, the next print may tell a different story, at least at the headline level.”

Ripple effects from the Iran war, which began in late February, have swiftly set back progress on inflation while amplifying longstanding affordability concerns.

Americans’ wage gains, which had been outpacing inflation by roughly one percentage point for nearly three years, quickly were eaten away in March. When adjusted for inflation, average hourly earnings grew at an annual rate of 0.3% March, down from 1.3% in February.

Excluding gas and food, categories that tend to be volatile, core CPI rose 0.2% in March, matching the pace from the month prior. On an annual basis, that closely watched index of underlying inflation rose 2.6% from 2.5% in February.

This story is developing and will be updated.

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