By Christopher Cicchiello | Quincy News Correspondent
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Washington (Quincy News) — U.S. consumer prices for common goods soared in March, putting the annual inflation rate at 3.3%, according to the newest Consumer Price Index (CPI) report from the Bureau of Labor Statistics (BLS) published Friday morning. The CPI increased a seasonally adjusted 0.9% in March, coinciding with the beginning of the war in Iran.
Gasoline prices climbed 21.2%, accounting for almost three quarters of the monthly increase for all items as the Strait of Hormuz largely closed for shipping traffic. BLS noted the rise in gas prices is the single largest monthly increase since 1967, when the gasoline index was first published. The entire energy index also rose 10.9%, a jump not seen since September 2005.
With uncertainty over how long the war will extend past the current two-week ceasefire, Professor David Mitchell, the Director of the Bureau of Economic Research at Missouri State University, told Quincy News he’ll be looking at whether these spikes in energy prices will seep deeper into the core price index.
“If these oil prices and gas prices stay elevated, that’ll start bringing up that core as well too,” Mitchell said. “So, the longer this thing goes on, the more embedded it becomes, and it becomes harder and harder to tease out.”
He added that if Iran is able to charge a “toll” fee in exchange for safe passage through the strait, consumers should expect to feel an additional impact.
Former transportation secretary Pete Buttigieg told CNBC Friday morning that he believes the latest price increases are driven by the war in Iran and administration policies, including tariffs and energy decisions. “They’re actively making goods prices higher with the tariffs,” Buttigieg said. “And they’re, of course, actively making energy prices higher with a war that nobody wanted.”
Meanwhile the CPI’s food index indicated no change from last month, despite an overall 2.7% increase over the past 12 months. Specifically, the index for meats, poultry, fish and eggs decreased 0.6% in March. Eggs saw a 3.4% decrease, but on the other side of grocery stores, the price of fruits and vegetables rose 1.0%, capping off a 4.0% increase in the past 12 months.
Administration officials highlighted these positive trends, noting that core inflation, which excludes food and energy, rose just 0.2% in March.
“We controlled the avian flu so much that there are hens all over the place laying eggs at a record rate, with egg prices about the lowest they’ve ever been,” White House economic advisor Kevin Hassett said on Fox Business. He also highlighted prices of beef and live-entertainment tickets.
But Mitchell cautioned against drawing conclusions from only looking at core inflation rather than the entire picture.
“I understand where they’re [Trump administration] coming from, but the problem is that core, which doesn’t include food and energy, includes things like TVs. I don’t buy a TV every month. The same thing for a car,” Mitchell told Quincy News. “It’s the food and energy that I’m buying consistently.”
Friday also saw the release of the University of Michigan’s Surveys of Consumers, which showed consumer sentiment was down 10.7% from last month, also aligning with the start of the Iran war. The report notes that consumers expressed a “substantial increase in concerns over high prices and weaker asset values.”
As economists predicted, the Personal Consumption Expenditures (PCE) price index increased 0.4% in February, according to a Wednesday report from the Commerce Department’s Bureau of Economic Analysis. The PCE is a metric that, along with the CPI, helps inform the Federal Reserve’s interest rate decisions. Mitchell doesn’t expect that figure will change any time soon.
“The labor market might be having issues, which would tend to make you think that the Fed might want to lower rates,” Mitchell said. “But the problem is, is it enough of an issue?”
The Federal Reserve’s next FOMC meeting is scheduled for April 28-29. Whether the Fed will raise, lower or hold interest rates steady remains uncertain.
But the committee hinted at its thinking last month.
“Partly as a result of these factors, the vast majority of participants noted that progress toward the Committee’s 2 percent objective could be slower than previously expected and judged that the risk of inflation running persistently above the Committee’s objective had increased,” the FOMC March minutes read.
The focus on inflation and the impact of the war in Iran comes as the Treasury Department released its latest official accounting of revenue and expenditures for March. It included corporate and personal income tax collections beginning to feel the impact of last year’s “One Big Beautiful Bill” law, but have yet to show the effects of the Supreme Court ruling capping tariff powers and the broader fallout from the war in Iran.
The numbers showed a slight uptick, year over year, in the monthly deficit between income and spending – a $164 billion deficit last month, $4 billion, or 2%, more than the March 2025 deficit.
In response to a question from Quincy News, a Treasury official said it’s too early to see how the situation in Iran is impacting revenue and spending. The official also cautioned that it’s too soon to gauge how increased military spending will impact the nation’s expenditures.
Quincy News correspondent Tom LoBianco contributed to this report.
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