Although inflation appeared to slow slightly at the beginning of 2026, the volatile war in Iran—and the accompanying shock to global oil prices over the last five weeks—raises the question of whether the March consumer price index will be upended by the conflict. At a time when affordability is already top of mind for millions of Americans, the report will certainly incorporate at least some of the war’s impact on gasoline prices, and scorching inflation numbers could put political pressure on President Donald Trump ahead of elections later this year.
The March consumer price index report will be published by the Department of Labor on April 10. Economists and policymakers will be watching these five things in Friday’s report:
The numbers
Inflation held steady over the last few months, hovering at a year-over-year rate of around 2.5%, which is lower than in the latter half of 2026 but still far from the Federal Reserve’s target of 2.0%. The consensus estimate for tomorrow’s report, however, is a headline rate of 3.4%, factoring in almost a full percentage-point increase just in the month of March.
Notably, the “core” CPI excludes volatile food and gas prices, meaning that the core number may be a more reliable indicator of the economy’s overall health. The core rate will not be as high, likely not reaching above 2.8%. While the March core figure may be moderately affected by the downstream impacts of high gas prices, analysts expect to see those price increases factored into the coming months.
An airfare nightmare
As early as the beginning of March, many consumers noticed that air fares had skyrocketed amid ballooning jet fuel prices, and airlines canceled thousands of flights due to severe shortages. The February consumer price index also showed a sizable increase in airfare inflation, even without the war impact factored in. Even so, demand for air travel remained relatively high in March, which may be a positive signal about how consumers are faring, but time will tell how long that sentiment can be sustained if the war rages on.
High demand for vehicles despite gas price hikes
Inflation in February was dampened partially thanks to prices for new vehicles remaining flat, while month-to-month prices for used vehicles actually decreased in January and February. The publication of Cox Automotive’s Manheim Used Vehicle Value Index on April 7, however, showed a significant rise in used vehicle prices owing to strengthened demand, which could contribute to core price inflation if it shows up in the CPI report. Furthermore, many analysts say that the Trump administration’s tariff policies are still being passed through to consumer prices, which is especially relevant for industries like new vehicles that rely on raw material imports.
What will the Fed do?
The Federal Reserve has kept interest rates steady in 2026 after cutting rates three times in 2025. Many economists were expecting the Fed to consider cutting rates again as early as June or July, especially given less-than-rosy jobs numbers. Now, given the inflation situation from the war in Iran alone, the Fed’s governors likely find themselves in a bind, facing pressure not to cut rates but to raise them, if the March CPI tells a story of runaway inflation that must be stopped.
In addition, earlier this week, the personal consumption expenditures report—the Fed’s preferred inflation measure—came in at 2.8%, which may have been stronger than expected but likely did not include the full extent of the oil shock. All said, the Fed is very likely to leave interest rates unchanged at its April meeting.
Expect high grocery bills
Over the last few years, the cost of groceries has dominated political debates about affordability. Heightened oil prices owing to the closure of the Strait of Hormuz have a tremendous effect on domestic agriculture, since most fertilizers are derived from petrochemicals coming from the Middle East. Although food prices in March may not show the complete impacts of these costs, the costs of fertilizer will likely factor into food prices in the coming months as many farmers begin their spring planting.