Inflation surged in March due to Iran war and tariffs

War-related price pressures worsened inflation in March, which the Federal Reserve was already struggling to regulate, reports Colby Smith for The New York Times.

The Consumer Price Index, or CPI, rose to 3.3% in March, making the Federal Reserve cautious of cutting interest rates. This is the highest monthly gain, 0.9%, since the post-pandemic inflation surge in June 2022.

The Consumer Price Index rose to 3.3% in March 2026. (Click to enlarge)

“Core” inflation, which doesn’t include volatile food and energy prices, rose to 2.6%, an increase from 2.4% last month, which isn’t as alarming to the Federal Reserve.

Policymakers worry that rising energy prices will “spill over into other sectors, affecting inflation more persistently,” Smith reports.

The Federal Reserve is also worried about businesses and manufacturing companies scaling back on hiring to offset rising input costs, potentially threatening the labor market, reports Smith.

The Bureau of Labor Statistics data listed below illustrates how commodity prices reacted to the war before last week's temporary cease-fire.

• International oil benchmark rose 50%, now down to 30% higher than prewar
• Gas prices rose 40% since February
• Energy index rose 11%
• Fuel oil rose 30.7% over the last month
• Other motor fuels including diesel rose 30.8%
• Airfares rose 2.7%, up 14.9% from a year prior

Excess inflation in the core goods category can be explained by recent tariffs, according to researchers at the Federal Reserve.

“Without evidence that inflation is in retreat, the Fed will likely find it hard to justify cutting rates below the current 3.5 percent to 3.75 percent level,” Smith reports. “What could prompt them to act sooner, however, is if the labor market deteriorates rapidly.” 

As residential electricity costs climb, big users pay less

Between 2022 and 2024 residential electricity costs 
increased by 10%. (Photo by J. Maculan, Unsplash)

After years of wallet-draining food inflation, many Americans must now contend with soaring home electric bills. "Since February 2020, electricity prices have increased by an average of 40% across the country," reports Shannon Osaka of The Washington Post. Overall, the brunt of the increased costs is being paid by residential customers even when they aren't the biggest users.

Many utilities have increased rates to fund needed infrastructure builds, but residential customers are paying more than commercial users. Osaka writes, "Residential electricity costs rose by 10% between 2022 and 2024. Commercial users, spanning everything from small corner stores to giant, energy-sucking data centers, have seen rates increase just 3%."

Building and repairing the poles, wires and transformers required for residential electricity delivery is costly and isn't generally needed by large commercial users, which is one reason many residential customers pay higher rates. Oska notes, "The average electricity price at the end of 2024 was 16 cents per kilowatt-hour for homes and apartments, and just 13 cents for commercial customers."

While infrastructure costs explain some of the difference in electrical prices, a complex system of lobbying goes on behind the scenes to determine how much a business will pay for electricity. Osaka reports. "In theory, each group is supposed to pay an amount that aligns with the cost to bring them power — but in practice, different groups can lobby for lower prices."

Charles Hua, executive director of PowerLines, a group that works to lower electricity costs for consumers across the country, told Osaka, "Residential consumers feel like they don’t have a voice in our utility regulatory system." Osaka adds, "Utilities often sign special contracts with data center customers that place them outside standard pricing agreements."

Some states are working to prevent data centers from shifting their expansion costs onto residential customers. Osaka reports, "Virginia recently established a new class for data centers and other huge users of electricity, with agreements in place to make sure the data centers pay for more of the grid upgrades required."

American consumers are worried about their energy bills, the job market and the increased cost of groceries

Americans deploy different strategies to counter grocery
costs. (Adobe Stock photo)

Between spiking energy bills and a dreary jobs market, a new poll from The Associated Press-NORC Center for Public Affairs documents the deep stress many Americans feel about their bills and future financial prospects, reports Olivier Knox of U.S. News and World Report. Along with those worries, American consumers continue to look for ways to counter the ever-increasing cost of groceries.

When asked about utility bills, 36% of poll respondents said their "electricity bills are a 'major' source of stress, and a bit more than one half – 54% – said the same about grocery costs, a little more than a year ahead of the November 2026 midterm," Knox writes.

Roughly 47% of polled adults said they were "'not very' or 'not at all confident' they could find a good job if they wanted to," Knox reports. This response marks a big increase from 37% the last time the question was asked in October 2023.

Polled responses were somewhat surprising given the U.S. economy's low unemployment numbers and healthy stock market gains. Knox adds, "But there are worrying signs, including a weakening labor market."

While many Americans express concern about the overall cost of living, most continue to battle ongoing grocery price increases, reports Christopher Kuo of The Wall Street Journal. According to the Labor Department data, since August 2024, the price of "coffee increased 20.9%, ground beef was up 12.8%, and bananas rose 6.6%. Dairy, fruits, vegetables and cereals have all become pricier."

In an effort to help stretch their food budgets, some consumers are "cutting back on purchases, stockpiling certain foods or exploring more-affordable stores," Kuo adds. Other shoppers have become choosier about what lands in their cart, while others scour sale-only items.

U.S. food costs are rising due to higher commodity prices for items like beef, along with market adjustments to tariffs. Kuo explains, "Some of these costs have been absorbed by food companies; others are being passed on to consumers."