{"id":559066,"date":"2026-04-30T17:22:13","date_gmt":"2026-04-30T17:22:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/559066\/"},"modified":"2026-04-30T17:22:13","modified_gmt":"2026-04-30T17:22:13","slug":"feds-key-inflation-gauge-hits-3-5-as-iran-war-pushes-up-gas-prices","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/559066\/","title":{"rendered":"Fed\u2019s key inflation gauge hits 3.5% as Iran war pushes up gas prices"},"content":{"rendered":"

\n Fast-rising gas prices<\/a> lifted the Federal Reserve\u2019s preferred inflation gauge to 3.5% in March, its highest rate in almost three years, new data showed Thursday.\n <\/p>\n

\n The Personal Consumption Expenditures price index rose 0.7% from February, a faster-than-expected acceleration from the previous monthly pace of 0.4%, the Commerce Department reported Thursday.\n <\/p>\n

\n The annual rate of inflation, which jumped from 2.8% in February<\/a>, is now running at its fastest pace since May 2023.\n <\/p>\n

\n The upswing in inflation was expected. Gas prices rose at record rates in March, aftershocks of the Middle East conflict\u2019s squeeze on the oil trade<\/a>. Unfortunately, there\u2019s little relief on the horizon: Prices at the pump remained high through April, and an energy shock like this is slowly making its way through other goods and services in the economy.\n <\/p>\n

\n But for Americans already weighed down by years of prices rising faster than they normally do<\/a> and facing a labor market that\u2019s downshifted<\/a> in speed, it\u2019s not a welcome development, said Elizabeth Renter, senior economist at NerdWallet.\n <\/p>\n

\n \u201cWe\u2019re seeing it in the consumer sentiment data<\/a> \u2013 not only are people feeling the pressure of affordability, specifically in gas prices, but also they\u2019re looking out around them and saying, \u2018Hey, one of the solutions to high expenses is making more money, and I really don\u2019t have the opportunity to do that in this job market,\u2019\u201d she told CNN in an interview.\n <\/p>\n

\n \u201cThe economy is holding on,\u201d she added. \u201cI don\u2019t think we\u2019re careening toward disaster at the moment, but I do think it\u2019s getting increasingly uncomfortable.\u201d\n <\/p>\n

\n The US-Israeli war with Iran, which is now entering its ninth week<\/a>, has sent shockwaves through the global economy. Shipping traffic in the Persian Gulf and the Strait of Hormuz has slowed to a trickle<\/a>, choking off a vital waterway for the trade of oil, natural gas, fertilizer and other critical materials.\n <\/p>\n

\n Economists were expecting the March PCE price index \u2013 like other<\/a> inflation gauges<\/a> before it \u2013 to reflect the record monthly rise in gasoline prices. Consensus estimates on FactSet showed an anticipated 0.6% monthly increase and for the annual rate to jump to 3.6%.\n <\/p>\n

\n When excluding food and energy costs, prices rose 0.3% from the month before (a slight downshift from the 0.4% monthly gain notched in February) and increased 3.2% on an annual basis. That\u2019s in line with what economists were expecting; however, the annual rate did move up from 3%.\n <\/p>\n

\n \u201cInflation was high when we went into this mess with Iran; it was already running hot,\u201d Renter said. \u201cEven if you take out the effects of the war in Iran, price growth is climbing, which is cause for concern.\u201d\n <\/p>\n

\n With the overall PCE price index now rising at a 3.5% annual rate, inflation is running above the Federal Reserve\u2019s 2% target. On Wednesday, policymakers for the US central bank opted to keep interest rates steady as the war puts upward pressure on inflation.\n <\/p>\n

\n Fed Chair Jerome Powell said Wednesday<\/a> that the current policy stance is in \u201ca very good place for us to wait and see,\u201d and that despite inflation \u201cmisbehaving,\u201d the economy has remained resilient.\n <\/p>\n

\n Separate federal data released Thursday added some support to that resiliency diagnosis: The economy grew at a 2% annualized rate during the first quarter; the estimated 189,000 jobless claims filed last week mark a nearly 60-year low; and workers\u2019 wages and benefits rose at a stronger-than-expected rate of 3.4% during the first quarter.\n <\/p>\n

\u2018Buckle in and be patient\u2019<\/p>\n

\n Americans have had to adjust to sharply rising gas prices; however, the energy shock hit at a time when many consumers\u2019 coffers were buffered a bit by larger tax refunds<\/a>. Additionally, wage gains, although slowing, continue to outpace inflation<\/a>, and some Americans are seeing wealth boosts from rising stock<\/a> and home values.\n <\/p>\n

\n The US economy does appear to still have \u201csome gas in the tank,\u201d but how much longer households can sustain high oil prices and potential accelerations in inflation remains a key question, noted Scott Anderson, chief US economist at BMO Capital Markets.\n <\/p>\n

\n \u201cIf inflation pressures continue to build in the months ahead, it will be more and more difficult for consumers to keep up,\u201d Anderson wrote in a note to investors on Thursday. \u201cThe rapid drop in the personal saving rate since the beginning of the year is a cautionary flag as we move into the second quarter.\u201d\n <\/p>\n

\n In addition to the PCE price index, which the Federal Reserve uses for its 2% inflation target, Thursday\u2019s Commerce Department report also provided a look at how households\u2019 spending, income and savings were holding up.\n <\/p>\n

\n Consumer spending jumped 0.9% from February, but when taking inflation into account, it rose just 0.2%.\n <\/p>\n

\n The dollars consumers put in their gas tanks and toward other energy goods accounted for 42% of the month\u2019s spending change, Commerce Department data shows.\n <\/p>\n

\n Households\u2019 personal and disposable (after-tax) income both rose at 0.6% paces in March; however, when accounting for inflation, disposable income dropped by 0.1%, the second consecutive monthly decline.\n <\/p>\n

\n The personal saving rate fell for the second month in a row as well, dropping to 3.6% from 3.9% and landing at the lowest rate in four years.\n <\/p>\n

\n Looking forward, Americans are going to have to \u201cbuckle in and be patient\u201d when it comes to gas prices, as well as overall inflation, NerdWallet\u2019s Renter said.\n <\/p>\n

\n US average gasoline prices hit a four-year high of $4.30 per gallon on Thursday, according to AAA<\/a>.\n <\/p>\n

\n \u201cIf the conflict ends sometime soon, and oil is flowing again in the Middle East, it\u2019s going to still take a while for gas prices to come down,\u201d she said. \u201cI think consumers should prepare for the high gas prices to extend through the summer months, if not into the fall, depending on the length of the conflict.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"Fast-rising gas prices lifted the Federal Reserve\u2019s preferred inflation gauge to 3.5% in March, its highest rate in…\n","protected":false},"author":2,"featured_media":559067,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-559066","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/559066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=559066"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/559066\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/559067"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=559066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=559066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=559066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}