Inflation Jumps to 3.3 Percent as Energy Prices Spike After Iran Conflict

The Consumer Price Index for All Urban Consumers rose 3.3 percent over the 12 months ending in March 2026, according to the Bureau of Labor Statistics. That is a sharp increase from 2.4 percent in both January and February. On a monthly basis, prices climbed 0.9 percent in March, the largest single-month gain in nearly four years.

Energy prices drove most of the increase. The energy index rose 10.9 percent in March, with gasoline prices jumping 21.2 percent. That was the largest monthly increase in gasoline prices since the Bureau of Labor Statistics began tracking the series in 1967. The spike is directly linked to U.S.-led military action against Iran, which began in late February and disrupted global oil supply through the Strait of Hormuz.

Core inflation, which excludes food and energy, was more contained. It rose 0.2 percent for the month and 2.6 percent over the year.

The Federal Reserve had already kept the federal funds rate steady at 3.5 to 3.75 percent at its March meeting. Policymakers also quietly revised their 2026 inflation forecast upward. Rate cuts this year now appear less likely, which affects borrowers with variable-rate debt and those waiting for lower mortgage rates.

The average 30-year fixed mortgage rate stood at 6.22 percent as of May 5, 2026, up week-over-week.

Experian noted that higher fuel costs are expected to push up shipping and transportation expenses, which will raise prices across a wide range of goods in the months ahead.