Headline inflation in the US jumped sharply last month, as surging oil prices pushed the all-items index higher by the most since June of 2022.
There’s no sense burying the lede. The gasoline index rose more than 21% in March from February, driving a 10.9% monthly advance for the broader energy gauge.
As the figure below shows, that’s the second-largest month-to-month jump on the energy index in data back to 1959.
Notably, March’s advance surpassed the increase seen four years ago, when Vladimir Putin invaded Ukraine. Only a force of nature — Hurricane Katrina — can claim a larger impact on the CPI energy gauge than Donald Trump.
The 21.2% increase on the gasoline index (the largest ever in data back to 1967) was responsible for almost three quarters of the all-items increase, which was 0.9% (0.865% unrounded), as expected.
On the bright side, the core index rose just 0.196%, below estimates.
On a YoY basis, the core gauge rose a cooler-than-expected 2.6%. The headline index posted a 3.3% annual increase, the largest since May of 2024.
Markets should be pleased with the tame read on underlying price growth for March. Although a sustained surge in energy costs would work its way beyond the all-items gauge eventually, the prospect of an Iran peace deal (however tenuous) helps alleviate those concerns.
As for the CPI-implied “supercore” measures, they were quite soft. Core services excluding shelter printed a meager 0.17% gain for March, far cooler than the prior month’s pace. The core services ex-rent and OER print, at 0.18%, was just half of February’s monthly advance.
One final note: Grocery prices actually fell in March from February. The YoY gain on the food at home index was below 2%.
All in all, this was actually a good inflation report, as absurd as that might sound. As long as you don’t need to drive anywhere, or use any energy, price growth’s quite tame. (Who’s “tired of winning?”)
It’s weird that there’s no real spike in the early 1970s during the Arab oil embargo. I remember that it was hard to even get gas, but don’t remember anything about the prices.
I was working at a gas station that had gas during the oil embargo. Back then gasoline was not self service. Those that self serviced typically did not pay. Long lines and never ending demand. Gasoline was definitely higher during the shortage and did not go down due to underlying inflation.
Speaking of Iran and gas prices, there was a huge spike in 79 when the revolution happened. I was a senior in high school. My bill in our “mock congress” was a 50c a gallon gas tax to fund development of green energy to reduce greenhouse gases and end our dependence on imported oil.
It was easily the most despised bill of the congress, losing 23-437
I paid $6.79 a gallon for regular unleaded here in SoCal on Monday. I think hat is the most I have ever paid. We were already at $4.00 a gallon here before the war began. No matter how peace negotiations go, I don’t expect to see $4.00 gas again here for some time.
Sorry, “I think that is the most. . . .”
Brits and other Euros pay much more. They buy it by the quart!