US Inflation Jumps to 3.5% as Iran War Energy Shock Persists
The Federal Reserve's preferred inflation gauge jumped to 3.5% in March as soaring oil prices from the Iran conflict spilled over into consumer prices. Core inflation accelerated to 3.2%, marking sustained pressure above the Fed's 2% target.
Inflation Surge on Energy Shocks
The core personal consumption expenditures price index, which excludes food and energy, accelerated a seasonally adjusted 0.3% for the month, pushing the 12-month inflation rate to 3.2%, the Commerce Department reported Thursday. Including the volatile gas and groceries components saw higher readings, with the monthly gain at 0.7% and the annual rate hitting 3.5%, also in line with forecasts.
War-Driven Prices
This year, the price of U.S. crude oil has surged almost 70% as a result of the war. Airlines have cut thousands of flights worldwide as the price of jet fuel spikes. In March, inflation overall jumped 0.9% from February, to an annual rate of more than 3.3%.
Fed's Outlook
Asked how the Fed is looking at price surges as a result of the war, Powell cautioned that "it hasn't even peaked yet." "I think we'd want to see the backside of that and progress on tariffs before we even thought about reducing rates," he said.