Inflation Returns to 3 Percent as Energy Prices Surge After Iran Conflict
U.S. inflation rose to 3.3 percent over the 12 months ending in March 2026, up sharply from 2.4 percent in January and February. Energy prices drove the increase, surging 10.9 percent in March after U.S.-led military action against Iran disrupted global oil supply. The Federal Reserve held interest rates steady and revised its inflation forecast upward.
U.S. inflation climbed back to 3.3 percent over the 12 months ending in March 2026, a sharp jump from 2.4 percent in January and February, according to the Consumer Price Index report released in April.
Monthly prices rose 0.9 percent in March, the largest single-month gain in nearly four years. Energy prices drove the increase, surging 10.9 percent for the month. Gasoline prices jumped 21.2 percent.
The spike in energy costs followed U.S.-led military action against Iran that began in late February, which disrupted oil supply through the Strait of Hormuz. Analysts said the disruption pushed crude oil prices higher globally.
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 held interest rates at 3.5 to 3.75 percent at its March meeting and revised its 2026 inflation forecast upward. Rate cuts that many economists had expected earlier in the year now appear less certain.
Higher fuel costs are expected to push up prices for shipping and transportation, which could raise the cost of a wide range of goods in the coming months.
Kiplinger's economic forecasts predict inflation could rise above 4 percent in May 2026 if energy prices remain elevated.
For consumers, the inflation increase means variable-rate debt such as credit cards and adjustable-rate mortgages will remain expensive. People waiting for lower mortgage rates may face a longer wait than expected.
