U.S. Inflation Rises 3.3% in March Amid Iran War Impact

Core CPI beats estimates as energy costs surge, but Fed expected to remain patient

Apr. 11, 2026 at 12:21am

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An abstract illustration composed of overlapping triangles and circles in shades of red, blue, and yellow, conceptually representing the rising inflation driven by energy costs in the wake of geopolitical tensions.As the U.S. grapples with the economic fallout of the Iran war, consumer prices surge but the Fed may hold off on drastic action for now.Menomonee Falls Today

U.S. consumer prices rose 3.3% in March, the first sign of inflationary pressure from the U.S.-Israeli war against Iran. Core CPI, excluding volatile food and energy prices, increased 0.2% from February, beating estimates. Economists say the Fed is likely to remain patient despite the energy-driven inflation, as long as wage growth and long-term inflation expectations remain anchored.

Why it matters

The March inflation data provides an early glimpse into the economic impact of the ongoing U.S.-Iran conflict, which has driven a sharp rise in crude oil and gasoline prices. While the headline inflation number was higher than expected, the more closely watched core CPI figure suggests the Fed may have room to hold off on aggressive interest rate hikes for now, as long as broader economic conditions remain stable.

The details

The Consumer Price Index rose 3.3% year-over-year in March, up from 2.4% the prior month. The index increased 0.9% from February, in line with estimates. Core CPI, excluding volatile food and energy costs, rose 0.2% from February, beating the 0.3% estimate, and was up 2.6% from a year earlier.

  • The March inflation data was released on April 10, 2026.

The players

Peter Cardillo

Chief market economist at Spartan Capital Securities in New York.

Alexandra Wilson-Elizondo

Global co-CIO of multi-asset solutions at Goldman Sachs Asset Management in New York.

Marc Chandler

Chief market strategist at Bannockburn Global Forex in New York.

Brian Jacobsen

Chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

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What they’re saying

“The key here is the core rate, which actually came in a little bit lower than we were looking for. The top line was hotter than we were looking for and on a yearly basis.”

— Peter Cardillo, Chief market economist

“The market was braced for a hot print, so today's inline number is a slight relief. However, it may be the best headline inflation number we see for a while as it may only partially capture the full force of the Iran conflict, which sent U.S. crude and U.S. gas up 70% at peak.”

— Alexandra Wilson-Elizondo, Global Co-CIO of multi-asset solutions

“I think that the bar to a Fed change later this month is very high, and the CPI was largely in line with expectations.”

— Marc Chandler, Chief market strategist

“Although I was braced for a jump in the headline CPI number due to higher gasoline prices, it was still startling to see it in print. There are no signs, yet, that high energy prices are seeping into core inflation.”

— Brian Jacobsen, Chief economist

What’s next

The Federal Reserve is expected to closely monitor the inflation data in the coming months as it weighs any potential interest rate changes. Economists say the central bank is likely to remain patient as long as broader economic conditions, including wage growth and long-term inflation expectations, remain stable.

The takeaway

The March inflation report shows the initial impact of the U.S.-Iran conflict on consumer prices, with energy costs driving the headline number higher. However, the more closely watched core CPI figure suggests the Fed may have room to hold off on aggressive rate hikes for now, as long as the broader economic picture remains stable.