U.S. inflation accelerates to 3.3% in March amid Iran conflict

U.S. consumer prices jumped 3.3% in March on a year-over-year basis, the largest increase since April 2024, according to data released Friday by the Bureau of Labor Statistics.

The monthly increase accelerated to 0.9% on a seasonally adjusted basis in March, more than triple the 0.3% rise recorded in February. The annual inflation rate climbed from 2.4% in February, marking a significant acceleration in price growth.

Energy prices emerged as the primary driver of the increase. The energy index surged 10.9% on a monthly basis and jumped 12.5% annually. Within the energy category, gasoline prices rose sharply, with the index increasing 21.2% in March. The spike in energy costs was attributed to the conflict in Iran and broader Middle East tensions.

Food prices also contributed to the overall increase, rising 2.7% annually in March compared to the same month a year earlier.

Beyond energy and food, price increases were recorded across multiple categories. Airfares, clothing, furniture, household operations, education, and new vehicles all saw price gains during the month. Healthcare and personal care services also experienced increases, though the sources did not specify the magnitude of those rises.

Core inflation, which excludes the volatile energy and food categories, rose to 2.6% annually in March, up one-tenth of a percentage point from February's reading. On a monthly basis, core inflation increased 0.9% in March.

The acceleration in inflation marks a departure from the disinflationary trend that had prevailed since the Russian invasion of Ukraine triggered a global price crisis in 2022. The March reading represents the largest monthly increase in consumer prices in four years, with prices last rising at such a pace in May 2022.

The Federal Reserve has maintained a target inflation rate of 2%. February's reading of 2.4% had brought inflation closer to that target before the March acceleration.