TLDR
- US CPI inflation rose 3.3% year-over-year in March, the highest since late 2025
- Monthly CPI jumped 0.9%, the largest single-month gain since 2022
- Gas prices surged 21.2%, driven by the US-Israel war closing the Strait of Hormuz
- Core inflation came in slightly below expectations at 2.6% year-over-year
- Stocks rose after the report and Fed rate cut odds improved
March inflation came in hotter than February but slightly cooler than economists feared. The Consumer Price Index rose 3.3% from a year ago, up sharply from February’s 2.4% reading.
BREAKING: March CPI inflation RISES to 3.3%, below expectations of 3.4%.
Core CPI inflation rise to 2.6%, below expectations of 2.7%.
CPI inflation is now up to its highest level since May 2024 amid the Iran War.
Fed rate cuts have been priced-out for 2026.
— The Kobeissi Letter (@KobeissiLetter) April 10, 2026
On a monthly basis, prices jumped 0.9%. That is the biggest one-month increase since 2022. Economists had forecast a 3.4% annual rise and a 0.9% monthly gain, according to Bloomberg.
The last time headline inflation was at or above 3% was September 2025.
The Bureau of Labor Statistics released the data on Friday morning. Markets reacted positively to the numbers, with stocks rising after the report.
The S&P 500 edged up 0.11% while the Nasdaq gained 0.56%. The Dow Jones fell 0.44%.
Energy Prices Behind the Jump
The main driver was energy costs. The gasoline index surged 21.2% in a single month. The Labor Department said that alone accounted for nearly three-quarters of the total monthly CPI increase.
It is the largest monthly gasoline price increase since the government began tracking it in 1967.
The spike is linked to the ongoing US-Israel war against Iran. The conflict has largely closed the Strait of Hormuz, a critical route for global oil supply. US crude oil prices hit a peak gain of 70% during the conflict.
Airfares rose 2.7% from February. Food prices were flat overall, though tomatoes jumped 15.3% and hot dogs fell 3.6%.
Core Inflation Came in Below Expectations
Core inflation, which strips out food and energy, rose just 0.2% month over month. That was below the expected 0.3%. Year over year, core inflation came in at 2.6%, slightly under the 2.7% forecast.
Services inflation was softer in March. Medical goods also helped keep the overall core reading in check.
Goldman Sachs Asset Management’s Alexandra Wilson-Elizondo said the inline print was “a slight relief” for markets that were braced for worse news.
However, she warned that March’s data may only partially reflect the full impact of the Iran conflict.
Economist Claudia Sahm of New Century Advisors described the current environment as a “whiplash economy.”
The Federal Reserve is expected to keep interest rates unchanged at its April 28-29 meeting. Fed policymakers have signaled they may look past some of the oil-driven inflation, particularly if it proves temporary.
Odds of a future rate cut improved following the CPI release, according to market data.
Brent crude was trading at $96.16 and US crude at $98.55 at the time of the report.
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