March inflation jumps to 3.3% as war in Iran drives energy costs higher

WASHINGTON (Gray DC) – The Bureau of Labor Statistics released inflation data for March showing an annual rate of 3.3%, up 0.9% in just one month.

Economists say while the higher rate may seem shocking, the reason is straightforward.

“In many ways, it’s a nonstory,” said Dr. David Bieri with Virginia Tech.

The March consumer price index report paints the first concrete picture of how the War in Iran is affecting inflation. The annual rate jumped from 2.4% in February to 3.3%, the highest in nearly two years. But that was expected, according to economists.

“It was entirely as expected. And that’s the good news,” Bieri said.

Bieri said it’s important to look deeper at the reasons underneath the high number, and there’s really just one: the War in Iran.

“For that specific increase, it’s been it,” Bieri said. “The straits [of Hormuz] remain a geopolitical chokepoint and that makes it sensitive to a globally priced commodity.”

Nearly three-quarters of the headline price increase for March came from energy costs, with a record 21.2% spike in gas prices from February. The increase is due mainly to the chokehold at the Strait of Hormuz crippling the global oil supply, sending gas prices skyrocketing.

However, core consumer prices rose much less, just 2.6% from a year ago, slightly below forecast, showing the data isn’t as dire as it seems.

“Core inflation has not moved… yet,” Bieri said.

Experts predict the spike in inflation is likely temporary. The rate should even out in the weeks following the eventual end of conflict in the Middle East, one global oil supplies stabilize.