March CPI Forecast to Reflect Surge in Energy Prices from Iran War

Key Takeaways

• The March inflation report will likely show a jump driven by higher energy prices, disrupting the moderate rate of growth that has characterized 2026 so far.
• Tariffs are likely to accelerate growth for food and gas prices, further depressing households’ spending power, economists say.
• Analysts widely believe the Fed will keep interest rates unchanged, especially after a strong job report in March.

Economists expect March’s Consumer Price Index report to show a spike in inflation, reflecting a surge in energy prices due to the Iran war. While the announcement of a two-week ceasefire on Tuesday offered some reprieve to skyrocketing oil prices, analysts say inflation is likely to remain elevated for the first half of the year.

Economists expect headline inflation to have increased 0.93% month over month in March and 3.70% on an annual basis, according to FactSet consensus estimates. This is a marked acceleration from January and February, which showed consecutive 2.4% year-over-year increases, in a pattern of steady inflation. Economists expect core inflation, which excludes food and energy prices, rose 0.29% monthly and 2.7% year over year in March, both up slightly from February levels.

Bank of America analysts believe energy prices increased by 10.6% in March, which would make for a hot inflation print.

At LPL Financial, chief economist Jeffrey Roach noted that tariffs should again contribute to CPI growth. “Trade policy pressures have not gone away, despite the ceasefire announcement and oil prices falling,” he says.

Oil prices tumbled following the temporary ceasefire announcement on Tuesday, but Roach says the conflict in the Middle East has put greater pressure on wholesale energy prices, which will likely keep inflation up in the first half of 2026. However, he expects price growth to moderate in the second half of the year, opening the door for the Federal Reserve to cut interest rates. “Inflation is still running hotter, and we still have some challenges in the near term,” he says. “Inflation is going to decelerate in the latter half of this year, but investors need to be patient during this period of flux.”

March CPI Report Highlights

• CPI report release date and time: Friday, April 10, at 8:30 a.m. EDT
• The CPI is forecast to rise 0.9% in March after rising 0.3% in February.
• Core CPI is forecast to rise 0.3% in March after rising 0.2% in February.
• The CPI year over year is forecast to rise 3.7% in March after increasing 2.4% in February.
• Core CPI year over year is forecast to rise 2.7% in March after increasing 2.5% in February.

Goods Prices to Continue Rising Amid Tariff Pressures

Outside of the energy price surge, economists expect trade policy to continue pushing up goods price growth. Goldman Sachs analysts Jessica Rindels and Ronnie Walker predict a particularly sharp increase in core goods inflation month over month to 0.22% in March from 0.08% in February. In an April report, analysts wrote that tariffs will “modestly boost” inflation over the next few months, mainly in the recreation, education, household furnishings, communication, and personal care industries.

JP Morgan analysts also expect tariffs to continue causing food prices to climb as trade costs pass through to consumers, raising the CPI even without spillovers from energy costs. “Regardless of where oil prices settle, their contribution to inflation will disappear if prices are unchanged, although the drag on households’ spending power will rise commensurately with the price,” they wrote.

LPL’s Roach expects March price growth to accelerate in the healthcare, housing, and vehicle categories. “Independent of the activities and pressures coming out of the Middle East, inflation is still running hotter than what the Fed would like,” he says. Still, he expects pricing pressure to ease in the housing and durable goods markets in the latter half of 2026.

Fed to Hold Rates Steady for Now

While forecasts call for a hot March inflation report, economists almost unanimously agree that the Fed will not pursue an interest rate cut at its April 29 meeting. CME’s FedWatch Tool shows 98.4% of respondents predict the central bank will hold rates steady at their 3.50%-3.75% range.

“The economy is not slowing as dramatically as it would if it were going into a recession,” Roach says. “But the economy is slowing a bit, coming off those breakneck speeds in the last two years. Inflation is still very hot, so the Fed’s going to have to stay on the sidelines.” While he expects the Fed to remain in “wait and see” mode in the short term, he says easing inflation in the latter part of the year leaves room for a rate cut in 2026.

Looking ahead to the central bank’s September meeting, 15.4% of market participants predict a quarter-point rate cut as of midday Wednesday, according to CME’s FedWatch Tool.

Though the CPI is a meaningful and widely followed inflation indicator, the Federal Reserve generally prefers to base its decisions on the Personal Consumption Expenditures Price Index. The US Bureau of Labor Statistics will release the March CPI report on April 10, while the US Bureau of Economic Analysis will release the February PCE report (delayed due to the government shutdown earlier this year) on April 9 and the March PCE report on April 30.