Amid a spike in gas and energy prices in March following U.S. attacks against Iran, the consumer price index posted its largest month-over-month increase in nearly four years.
Prices for goods and services rose 0.9% in March. For the 12 months ending in March, inflation climbed 3.3%, up from 2.4% in February.
Since 2000, the average annual inflation rate has been 2.1%. The Federal Reserve’s target is 2%, but inflation well below that level has often signaled a recession.
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The consumer price index weighs the costs of goods based on their importance, with food, shelter and energy carrying more weight.
Energy costs surged 10.9% in March, the Bureau of Labor Statistics reported.
Food and shelter costs have remained above 2% over the past year, indicating inflation more broadly is still a concern.
Workers continue to see pay increases. Average weekly wages rose 3.5% over the past year, with private-sector employees seeing particularly strong gains, according to ADP.
The latest data could signal the Federal Reserve may hold off on lowering interest rates in 2026. The Fed had projected a quarter-point cut this year, but it typically raises rates during periods of high inflation.
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