NEW YORK, April 10 – American consumers faced higher prices in March as inflation accelerated to 3.3% compared to the same period last year, according to federal data released Friday. This marks the initial economic measurement capturing price effects from the ongoing U.S.-Israeli military conflict with Iran.
The Consumer Price Index increase aligned with forecasts from financial analysts surveyed by Reuters, though it represented a notable jump from February’s 2.4% annual rate. Monthly price growth reached 0.9% between February and March, matching predictions after the previous month’s 0.3% increase.
Core inflation, which strips out unpredictable food and energy costs, performed better than anticipated. It climbed just 0.2% monthly, below the projected 0.3%, and reached 2.6% annually, also under estimates.
Financial markets watched Friday’s inflation data closely since it represents the first official glimpse of how the military conflict has affected American prices. The war has pushed crude oil costs significantly higher and raised investor concerns about future inflation trends.
Stock markets showed mixed responses following the report’s release. The Dow Jones Industrial Average dropped 0.2% while the Nasdaq Composite gained 0.4%. Treasury bond yields edged higher, with the benchmark 10-year note yield increasing one basis point to 4.30%. The dollar weakened, with the dollar index falling 0.2% to 98.6.
Peter Cardillo, Chief Market Economist at Spartan Capital Securities in New York, focused on the core inflation figure. “The key here is the core rate, which actually came in a little bit lower than we were looking for. The top line was hotter than we were looking for and on a yearly basis,” Cardillo explained.
He cautioned that current numbers don’t capture the complete energy crisis impact. “So, while these numbers are not overly worrisome at this time, they do not include the full effects of the energy crisis,” Cardillo said. “Moving forward, obviously we should expect more increases in inflation, but the key is the core rate which was cooler than expected suggests that energy prices eventually will work their way into the system, and they’ll show up later on. But for now, inflation remains elevated and sticky.”
Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management, viewed the data as temporary relief. “The market was braced for a hot print, so today’s inline number is a slight relief. However, it may be the best headline inflation number we see for a while as it may only partially capture the full force of the Iran conflict, which sent U.S. crude and U.S. gas up 70% at peak,” she stated.
Wilson-Elizondo noted broader economic pressures ahead. “With input costs globally surging to their highest levels since Covid, the next print may tell a different story, at least at the headline level. That said, the U.S. economy is far less oil-intensive than it was in the 1970s, and a 10% sustained rise in oil adds only about 5 basis points to core.”
She expressed confidence in Federal Reserve policy flexibility. “Wage growth has decelerated to levels consistent with the inflation target, and long-term inflation expectations remain anchored. We believe the Fed will look through the energy-driven noise so long as these factors hold. The Fed has room to be patient, and every reason to do so. Today’s number buys the Fed time, but the real test lies ahead.”
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, didn’t expect immediate Federal Reserve policy changes. “I think that the bar to a Fed change later this month is very high, and the CPI was largely in line with expectations,” he commented.
Brian Jacobsen, Chief Economist at Annex Wealth Management in Wisconsin, expressed surprise at gasoline price effects. “Although I was braced for a jump in the headline CPI number due to higher gasoline prices, it was still startling to see it in print. There are no signs, yet, that high energy prices are seeping into core inflation. That could be a process that plays out over time as companies absorb the brunt of the blow, at least initially. Perversely, consumers cutting back on other discretionary items could push core inflation lower instead of higher,” Jacobsen observed.
