In that sense, the CPI report is “a bit stale at this point,” said Joe Seydl, senior markets economist at J.P. Morgan Private Bank. <\/p>\n
“It’s not incorporating what is the most important [macroeconomic] shock right now,” he said. <\/p>\n
Inflation impact of war in Iran<\/p>\n It’s unclear how much the war in Iran will add to inflation in the U.S. economy. <\/p>\n The war has caused global oil prices to spike \u2014 leading prices for gasoline, diesel, jet fuel and other products refined from crude oil to surge, too. <\/p>\n That’s because the conflict has choked off oil supply through the Persian Gulf, a major corridor for global energy exports \u2014 amounting to the biggest oil supply disruption in history<\/a>. <\/p>\n Brent crude<\/a>, a global oil price benchmark, touched $119.50 per barrel on Monday, up from about $70 per barrel before the U.S.-Israeli attacks. It’s since declined<\/a> from its recent peak, to around $90 per barrel.<\/p>\n An aerial view as oil pumpjacks operate while others stand idle in the Inglewood Oil Field on March 10, 2026 near Los Angeles, California.<\/p>\n Mario Tama | Getty Images<\/p>\n A prolonged crisis could lead oil prices to stay elevated, resulting in sustained pain at the gasoline pump for consumers, economists said. <\/p>\n Average gasoline prices hit $3.50 per gallon as of Monday<\/a>, their highest level since 2024, according to the U.S. Energy Information Administration. Prices are up about 57 cents a gallon \u2014 or 19% \u2014 from $2.94 a gallon on Feb. 23, two weeks earlier.<\/p>\n Households could also see prices rise elsewhere, economists said.<\/p>\n For example, rising jet fuel costs could filter into higher airfares ahead of the busy spring and summer travel seasons; more expensive diesel could feed into elevated food prices due to increased costs to transport food items to the grocery store, economists said. <\/p>\n A prolonged conflict that leads to a sustained increase in inflation would also complicate the Fed’s interest rate policy, economists said. <\/p>\n “I think the Fed sits on its hands and doesn’t move,” Zandi said. “In significant part because of the uncertainty created by the war.”<\/p>\n Impact depends on length, scale of supply shock<\/p>\n The ultimate impact depends on how long the conflict drags on, and to what extent it disrupts energy supplies from the Middle East, Seydl said.<\/p>\n The most likely scenario is a “severe but short-lived” conflict that lasts just a few weeks, and sees U.S. oil prices<\/a> gradually drop back to around $60 by the end of 2026 \u2014 roughly where they were before the conflict, Stephen Brown and Thomas Ryan, North America economists at Capital Economics, wrote in a research note on Tuesday. <\/p>\n Read more CNBC personal finance coverageSocial Security 2027 COLA forecast may rise with high oil prices<\/a>You can’t ‘borrow your way out of debt,’ expert says, but more people are trying<\/a>Here’s the inflation breakdown for February 2026 \u2014 in one chart<\/a>SAVE plan used by millions of student loan borrowers is over, court orders<\/a>Identity theft and your taxes: It’s ‘a terrible reverse lottery,’ one victim says<\/a>As Iran war disrupts oil prices, consumers could be ‘hammered,’ economist says<\/a>Million-dollar earners have already stopped paying into Social Security for 2026<\/a>Women and the K-shaped economy: Lower pay, affordability issues reduce spending<\/a>Small 401(k) accounts may follow workers to their next job \u2014 except Roth money<\/a>In a jobs apocalypse, look to ‘AI-proof’ skilled trades, career experts say<\/a>Middle-income homebuyers have $30,000 more buying power than a year ago<\/a>Average IRS tax refund is up 10.6%, early filing data shows<\/a>GOP ‘big beautiful bill’ to deal ‘shock’ to the ACA marketplace: health experts<\/a>As millions claim Trump’s ‘no tax on overtime’ deduction, filers risk mistakes<\/a>S&P 500 shrugs off 1% daily drops all the time. Investors can too, advisors say<\/a>CNBC’s Financial Advisor 100: Best financial advisors, top firms ranked<\/a><\/p>\n However, a longer conflict that inflicts minor damage to energy infrastructure could lead U.S. oil prices to average about $100 per barrel for the rest of the year, Brown and Ryan wrote. In this case, the CPI inflation would rise to 3.5% by the end of 2026, up from the current 2.4% forecast, they estimated.<\/p>\n In that case, gasoline prices could rise to just shy of $5 per gallon in the second quarter, they wrote. The CPI inflation for airline fares could rise from 2.2% in January to a peak of around 20% due to jet fuel costs, they wrote. <\/p>\n Additionally, agriculture prices would be “most at risk” relative to other commodities if there were a sustained rise in prices for oil and for global natural gas<\/a>, which is a key input for fertilizer, Brown and Ryan wrote.<\/p>\n Disruptions to fertilizer supply would risk a shortfall in U.S. crops, Zippy Duvall, president of the American Farm Bureau Federation, wrote Monday in a letter<\/a> to President Donald Trump<\/a>. <\/p>\n “Not only is this a threat to our food security \u2014 and by extension our national security \u2014 such a production shock could contribute to inflationary pressures across the U.S. economy,” Duvall wrote.<\/p>\n Tariffs were primary inflation factor<\/p>\n Before the war in Iran, tariffs that Trump imposed were the main factor underpinning elevated inflation, economists said.<\/p>\n “It’s primarily tariffs, in our view,” said Seydl of J.P. Morgan.<\/p>\n Without the “tariff shock” of 2025, the U.S. inflation rate would likely be back to target, he said. <\/p>\n The Supreme Court struck down a centerpiece of the Trump administration’s tariff agenda<\/a> in February, ruling that tariffs levied under the International Emergency Economic Powers Act of 1977 were illegal. <\/p>\n Trump cited the IEEPA as the legal backbone for a host of tariffs he put on imports from other nations, including a 10% baseline tariff on all U.S. trading partners and even higher duties on select nations.<\/p>\n Shortly after the ruling, the Trump administration introduced new tariffs under a separate legal justification, aiming to keep the effective tariff rate roughly equal to what it had been before the Supreme Court ruling.<\/p>\n Economists said there wouldn’t be much inflationary relief for consumers in the short term as a result. <\/p>\n For example, before the court ruling, the average effective tariff rate was 14.3%, the highest since 1939, according to the Yale University Budget Lab. The current tariff rate, after the Trump administration’s latest maneuver, is 10.5%, the highest since 1943, according to a March 9 analysis<\/a>.<\/p>\n![\"No](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/108275577-17730766611773076658-44461039040-1080pnbcnews.jpg\")
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