Surging Oil Prices Drive Inflation Higher, U.S. March CPI Jumps Sharply

April 10 U.S. Department of Labor data released Friday showed March CPI rose 3.3% year-over-year—well above February’s 2.4% reading. Core inflation (excluding food and energy) climbed 2.6% on a year-over-year basis, slightly below the 2.7% market forecast. March energy prices jumped 12.5% y/y, sharply faster than February’s 0.5% gain. Gasoline prices rose 18.9% while fuel oil surged 44.2%. This was the first report to capture the Iran war’s impact on U.S. inflation: Closure of the Strait of Hormuz disrupted shipping last month, pushing up crude oil and gasoline prices. Economists warn that even if the Strait fully reopens, energy and commodity prices that spiked amid the war are unlikely to return to pre-war levels immediately. Businesses typically act fast to hike prices but are slower to cut them. Stifel Chief Economist Lindsey Piegza noted: “Most of these impacts will likely materialize one to two months down the line.”