Gasoline Prices Drive Surge in U.S. Inflation

Gasoline Prices Drive Surge in U.S. Inflation

Soaring gasoline prices linked to the war in Iran played a major role in pushing U.S. consumer inflation sharply higher in March. Annual inflation rose to 3.3%, up from 2.4% in February, according to the latest data from the Labor Department.

On a monthly basis, the all-items Consumer Price Index (CPI) increased by 0.9%—the largest gain since June 2022—raising expectations that the Federal Reserve may reconsider its stance on interest rates.

Energy costs were the primary driver of the increase. Overall energy prices jumped 21.3% in March, fueled by a 21.2% surge in gasoline and a 30.7% spike in fuel oil. Compared with a year earlier, gasoline prices were up 18.9%, while total energy costs rose 19.4%.

Economists suggest policymakers may treat the spike as temporary. “The Fed will likely look past the energy supply shock as a one-time boost to inflation and instead monitor the labor market, which tends to weaken with a delay following energy shocks,” said Bernard Yaros, lead U.S. economist at Oxford Economics.

The rise in energy prices—largely driven by war-related disruptions to oil transport in the Persian Gulf—temporarily overshadowed other typical contributors to inflation. Shelter costs, which include rent, rose a modest 0.3% in March and were up 3% over the past year. Medical care services were flat for the month but increased 3.7% annually.

Transportation services, which are closely tied to fuel prices, showed some upward pressure, rising 0.6% for the month and 4.1% year over year. Food prices, however, remained relatively stable in the short term, showing no monthly change, though they were up 2.7% compared with March 2025.