The U.S. Bureau of Labor Statistics reported Friday that the Consumer Price Index for All Urban Consumers increased 0.9 percent in March on a seasonally adjusted basis, following a 0.3 percent rise in February. Over the 12 months ending in March, the headline CPI climbed 3.3 percent, up sharply from 2.4 percent in the year through February and marking the highest annual rate since May 2024.

Core CPI, which excludes food and energy, rose 2.6 percent year over year in March, up slightly from 2.5 percent the prior month. The monthly core increase stood at 0.3 percent. The data, released at 8:30 a.m. ET, exceeded some economists' expectations for a 3.4 percent headline reading in some forecasts but aligned with consensus estimates of 3.3 percent.

The surge was primarily driven by energy prices, which jumped amid the ongoing Iran war that disrupted oil supplies through the Strait of Hormuz. Energy costs rose 12.5 percent year over year, a stark turnaround from 0.5 percent in February, with gasoline surging 18.9 percent and fuel oil up 44.2 percent. Gasoline prices contributed significantly to the 0.9 percent monthly headline increase. Transportation services also climbed 4.1 percent annually.

Food prices continued their upward trend, though specific March breakdowns were not immediately detailed in initial reports. Shelter costs, a persistent pressure point, had risen 3.0 percent year over year through February and remained a key factor in core inflation. The data reflect broader inflationary pressures from supply disruptions and heightened geopolitical tensions.

The March figures reverse recent cooling trends, where inflation had hovered near the Federal Reserve's 2 percent target earlier in the year. February's 2.4 percent annual rate followed 2.7 percent in December 2025. Economists note that while energy spikes may prove transitory if the conflict eases, embedded costs in services and goods could prolong higher inflation.

The report complicates the Federal Reserve's path. Officials face a trade-off between supporting a softening labor market and combating resurgent price pressures. Expectations for rate cuts have diminished, with some analysts warning that premature easing could entrench inflation expectations. The next CPI report, for April, is due May 12.

Consumers felt the pinch from higher fuel and transportation costs, exacerbating strains on household budgets amid steady shelter expenses. The BLS collects data from urban areas representing over 90 percent of the population, weighting categories by spending patterns.