U.S. consumer prices rose 0.9% from February to March 2026, pushing the annual inflation rate to 3.3%, up from 2.4% in February, according to the Labor Department. Gasoline prices surged 21.2% over the month, the largest monthly increase since 1967, accounting for nearly three-quarters of the overall rise in inflation.

Fuel oil prices jumped more than 30% from February to March, the biggest such surge since February 2000. Since the United States and Israel launched military action against Iran, average gas prices have increased by more than $1 per gallon. Oil prices have retreated from recent highs but remain about 30% above pre-conflict levels. The Strait of Hormuz is a critical passage for commodities including natural gas, fertilizer, aluminum, helium, and oil.

Core inflation, which excludes food and energy, rose 0.2% between February and March and stood at 2.6% over the 12-month period. Food prices were unchanged over the month, and prices for prescription drugs and eggs declined in March.

"Transitory is the hope, but Fed officials will think twice before telling the public they expect inflation to be transitory, after having misjudged post-pandemic inflation and mislabelled it as such." Atakan Bakiskan, U.S. economist at Berenberg, said.

"We were making progress, making progress. Then we kind of stalled out and now it's been inching itself up the other way." Federal Reserve Bank of Chicago President Austan Goolsbee said.

Bernard Yaros, lead U.S. economist at Oxford Economics, said the Federal Reserve could still ease monetary policy despite the inflation uptick. "As long as long-run inflation expectations remain well anchored, we still think the Fed will step in later this year and cut interest rates twice to shore up the labor market in the face of this energy supply shock." he said.

Employers added 178,000 jobs in March after cutting workers the previous month. The unemployment rate fell to 4.3%. Average hourly earnings increased 0.2% over the month, but inflation-adjusted pay fell 0.6% in March.

The American Automobile Association said gas prices averaged $4.15 per gallon nationwide on the reported Friday, down $0.02 from the previous day. In California, the average cost of a gallon of gas was $5.93 on the reported Thursday, according to the AAA. The University of Michigan's monthly gauge of consumer sentiment fell to a record low in April 2026.