New Bureau of Labor Statistics data show a sharp rise in inflation in March, driven largely by a surge in energy prices tied to the U.S.-Iran conflict.
The Consumer Price Index rose 0.9% month-over-month in March, the BLS reported. Energy costs were the main contributor, increasing 10.9% for the month; gasoline spiked 21.2%. On a year-over-year basis, overall prices were up 3.3% from March 2025, the fastest annual increase since April 2024.
Separately, the top Democrat on the Senate Finance Committee released information from a senior Treasury adviser indicating the Treasury Department did not conduct preparatory economic analysis related to the Iran strikes. Sriprakash Kothari, an adviser to Treasury Secretary Scott Bessent and a nominee for assistant secretary for economic policy, told Sen. Ron Wyden’s staff that he had not done energy-market or other related analysis before the February 28 strikes and was not aware of anyone at Treasury who had.
Wyden called the absence of basic planning “unacceptable,” especially given what he described as a growing affordability crisis exacerbated by the conflict. Intelligence assessments had warned that Iran could cause significant disruption, including threats to shipping and oil flows through the Strait of Hormuz, risks Wyden said were foreseeable.
Analysts estimate the economic cost has been steep: more than $30 billion to U.S. taxpayers in the first six weeks of the conflict, and U.S. drivers paid an estimated $8 billion extra at the pump in the first month after the attacks as oil prices rose.
Reporting suggests the administration underestimated Iran’s willingness to threaten or shut the Strait of Hormuz in response to U.S. strikes. While some Energy and Treasury officials participated in planning meetings, accounts indicate that the kind of cross-agency analysis and forecasting used in previous administrations did not play a central role.
Economists quickly linked the March inflation spike to the conflict. University of Michigan economist Justin Wolfers called the March figures “the first numbers showing economic effects of the war in Iran” and warned of further effects to come. New York Times economics reporter Ben Casselman noted the 3.3% annual rise was the fastest inflation rate of the president’s second term and was driven almost entirely by higher energy costs.
Heather Long, chief economist at Navy Federal Credit Union, pointed out that wage gains are largely being eroded by higher prices: wages grew about 3.5% over the past 12 months while inflation rose about 3.3%, leaving many households with little real pay growth.
Advocates also warned of broader consequences beyond fuel. Elizabeth Pancotti of Groundwork Collaborative said the jump in energy prices was evident to anyone filling a gas tank and would ripple into summer travel, groceries, and electronics as the conflict disrupts global supply chains. She criticized the administration’s policy choices as harming families.
Republicans emphasized that core inflation, which excludes food and energy, rose less than expected in March and used that to argue for better performance on underlying inflation. Critics replied that when gasoline and energy jump, core measures offer limited comfort to consumers facing higher pump prices; national averages reached roughly $4.15 per gallon.
Observers noted that previous administrations have similarly pointed to core inflation during oil shocks to reassure voters, often with limited political effect. Vox senior editor Benji Sarlin summed up the political challenge: distinguishing between headline and core inflation during an oil shock is unlikely to satisfy motorists and households feeling the pinch.
(Reporting compiled from BLS figures, public statements, and media accounts.)
