First inflation report since Iran war stuns Wall Street as conflict sends shockwaves through the economy... and you're paying the price
The government's latest prices report card is giving the US economy an 'F' - that means most of the things you buy every day are getting much more expensive.
It showed prices jumped by almost 1 percent last month, pushing the yearly inflation rate up to 3.3 percent, its highest level in two years.
The Iran war is the main culprit behind the failing grade, as fighting in the Middle East sent energy prices soaring, up nearly 11 percent, according to the March inflation report.
Data from AAA shows the national average US gasoline price surpassed $4 a gallon last month, for the first time in four years.
But this 'war tax' is hitting more than just your gas tank: Grocery bills are creeping up again, with food prices gaining 2 percent over the last year.
This is partly because it costs more to truck the food to the store and partly because fertilizer prices are spiking.
When it costs more for truckers to deliver your food to market, you're the one who ends up paying extra at the checkout line.
'The message is clear: inflation remains sticky - and that optimistically assumes the energy surge proves to be temporary,' Brent Kenwell, US investment analyst at eToro, told the Daily Mail.
Wall Street reacted to the March inflation report with shock this morning
Brent Kenwell, US investment analyst at eToro
According to Kenwell, while the data might not inspire the Federal Reserve to raise interest rates any time soon, it certainly does mean that the Fed will not be in the mood to cut rates this year.
Even before the war, inflation was running hot thanks to the Trump administration's tariffs and strong consumer demand.
'Inflation pressures were already building before the war and are now intensifying,' said Dean Baker, senior economist at the Center for Economic and Policy Research.
Gasoline prices soared by a staggering 21.2 percent in just one month, accounting for nearly three-quarters of the overall increase in inflation, according to the data from the Bureau of Labor Statistics.
So-called ‘services’ inflation – a key measure watched closely by economists – rose just 0.2 percent on the month and 3 percent over the past year.
In plain English, ‘services’ means the everyday things you pay for that aren’t physical goods – think rent, healthcare, insurance, haircuts, childcare and gym memberships.
These costs tend to be slower to fall, which is why the Federal Reserve watches them so closely when deciding interest rates.
Shelter costs – the biggest chunk of services spending, including rents and housing-related bills – rose 0.3 percent in the month and 3 percent annually, one of the lowest readings since mid-2021.
Gasoline prices soared by a staggering 21.2 percent in just one month
Food prices, meanwhile, showed little movement overall, rising 2.7 percent over the year. Grocery prices actually dipped slightly, falling 0.2 percent in the month.
But there were fresh warning signs that global tensions and trade policies are starting to filter through.
Airline fares jumped 2.7 percent in the month, while clothing prices rose 1 percent – early hints that higher fuel costs and tariffs could begin pushing up prices more broadly.
Stock markets reached calmly on the whole this morning, with all three major indices in the green.
While that is a good sign for your 401(k), the fact remains that inflation is back in black, and might be causing you wallet headaches for the foreseeable future.
