Iran War–Driven Gas Spike Pushes March CPI to 3.3% With Largest Monthly Inflation Jump in Nearly Four Years
U.S. consumer prices jumped in March as CPI rose 0.9% month‑over‑month and 3.3% year‑over‑year — the largest monthly gain in nearly four years — largely driven by a sharp gasoline spike tied to the Iran war, with gasoline accounting for roughly three‑quarters of the increase and average pump prices climbing by more than $1 to about $4.15 per gallon (up from $2.98 before the attacks). Core CPI was 2.6% year‑over‑year (about 0.2% m/m), but Chicago Fed President Austan Goolsbee warned that inflation progress has “stalled” amid business uncertainty — even as March payrolls rose by 178,000 — and economists note the current backdrop differs from the 2021–22 surge because labor market and consumer demand are weaker and there’s no new large stimulus.
📌 Key Facts
- Headline CPI rose 0.9% month‑over‑month from February to March — the largest monthly increase in nearly four years — pushing year‑over‑year headline inflation to 3.3% in March (up from 2.4% in February).
- A surge in gasoline prices accounted for nearly three‑quarters of March's month‑over‑month CPI increase; the monthly jump in gas prices was the largest in about six decades.
- Average national gasoline prices have risen by more than $1 per gallon since the U.S. and Israeli attacks on Iran; AAA put the national average at $4.15 per gallon as of Friday, up from $2.98 the day before the Iran war began, and pump prices have remained high despite a tentative ceasefire.
- Core CPI (excluding food and energy) was 2.6% year‑over‑year in March and rose a modest 0.2% month‑over‑month, indicating underlying inflation is rising but has not yet broadly spilled into other categories.
- Chicago Fed President Austan Goolsbee said inflation progress has 'stalled out' and is 'inching itself up the other way,' warning the increase could become entrenched.
- Payrolls grew by 178,000 in March after a prior month of cuts; Goolsbee said business uncertainty from the war is causing firms to 'sit on our hands' rather than hire or fire aggressively.
- Economists emphasize the current conditions differ from the 2021–22 post‑pandemic inflation surge: the labor market and consumer demand are weaker now and there are no new large stimulus checks bolstering spending.
- Analysts note March's CPI is the first reading to fully capture the economic effects of the Iran war.
📊 Relevant Data
In 2022, Black or African American households spent an average of 3.59% of their income before taxes on gasoline, other fuels, and motor oil, compared to 3.29% for White, Asian, and all other races (not including Black or African American).
Race of reference person: Annual expenditure means, shares, standard errors, and relative standard errors, Consumer Expenditure Surveys, 2022 — U.S. Bureau of Labor Statistics
Black households face a residential energy expenditure gap of about 1 percentage point higher as a share of income compared to White households at similar income levels.
The Race Gap in Residential Energy Expenditures — University of California, Berkeley
As of 2025, Black or African American service members comprise approximately 17.6% of active-duty U.S. military personnel, compared to 13.6% of the U.S. population.
2025 USAF & USSF Almanac: DOD Personnel — Air & Space Forces Magazine
📰 Source Timeline (3)
Follow how coverage of this story developed over time
- Confirms March CPI rose 0.9% month-over-month, the largest such increase in nearly four years, explicitly tying it to the largest monthly jump in gas prices in about six decades.
- Reiterates that headline CPI was 3.3% year-over-year in March, up from 2.4% in February, and that this is the first inflation read to fully capture Iran war effects.
- Clarifies that core CPI rose 2.6% year-over-year in March, with a modest 0.2% month-over-month gain, suggesting energy price spikes have not yet broadly spilled into other categories.
- Provides updated average national gasoline price of $4.15 per gallon as of Friday, up from $2.98 the day before the Iran war began, according to AAA.
- Highlights economists’ view that current conditions differ from the 2021–22 post‑pandemic inflation spike because the labor market and consumer demand are weaker and there are no new large stimulus checks.
- Confirms CPI rose 0.9% month‑over‑month from February to March, with higher gasoline prices accounting for nearly three‑quarters of that increase.
- Specifies that average gasoline prices have risen by more than $1 a gallon since the U.S. and Israel launched attacks on Iran, and that pump prices have remained high despite a tentative ceasefire.
- Reports March core inflation at 2.6%, highlighting that underlying inflation is also climbing, not just energy.
- Includes on‑the‑record comments from Chicago Fed President Austan Goolsbee that inflation progress has “stalled out” and is now “inching itself up the other way,” raising concern it could become entrenched.
- Notes March job growth of 178,000 after a prior month of cuts, with Goolsbee saying business uncertainty over the war is leading firms to "sit on our hands" rather than hire or fire aggressively.