Inflation is about to explode! March could be one of the months with the fastest price increases in the United States in decades.

Liaojishe, April 8 (Editor: Xiaoxiang) Just as Trump agrees to a two-week ceasefire between the U.S. and Iran, the U.S. economy may also send a series of harsh warning signals later this week. For Trump and the White House aides around him, amid a steady slide in poll approval ratings, “TACO” itself may also have become the only viable path in front of them……

Industry insiders say that, boosted by the Iran war pushing up gasoline prices, the U.S. CPI in March may surge significantly, becoming one of the months in history with the largest inflation spike.

Media surveys of economists show that economists expect the U.S. CPI report scheduled for release on Friday to indicate that in March, the U.S. inflation rate will rise 0.9% month over month.

This projected month-over-month increase by itself is a rather striking figure. Notably, since 1981, there have only been 16 instances in which the month-over-month price increase reached 0.9% or higher, and this would also be the largest month-over-month increase since June 2022—when the U.S. CPI year-over-year increase exceeded 9%.

On a year-over-year basis, economists forecast that this month-over-month increase would lead to a 3.3% year-over-year rise in the March CPI, also setting the highest level since April 2024.

If the CPI report ultimately released on Friday meets the expectations above, it will highlight the economic cost the U.S. is paying from the U.S.-Iran war— this war has caused energy prices to climb sharply. The conflict led to the closure of the Strait of Hormuz between Iran and Oman; this crucial waterway typically carries 20% of the world’s oil supply.

Over the past more than a month, this geopolitical conflict has already driven oil prices soaring worldwide, in turn pushing up gasoline and diesel prices; within the first five weeks after the outbreak of the war, the price of U.S. gasoline per gallon has risen by more than $1. Economists say that as the war continues, the rise in energy prices will intensify further and may spill over into other products, because transportation companies will pass higher fuel costs on to customers.

At present, the surge in gasoline prices has squeezed U.S. household budgets, forcing money to flow into other areas and damaging consumer spending; meanwhile, higher inflation is also pushing the Federal Reserve to keep key interest rates at elevated levels for longer, thereby raising borrowing costs for all kinds of loans. Both trends are weighing on economic growth.

In a commentary, Jim Reid, Head of Macro Research at Deutsche Bank, wrote, “The impact of the energy price shock will fully show itself.”

Inflation expectations rise in tandem

What may be even more unsettling is that inflation expectations are rising in tandem. According to a survey released by the Federal Reserve Bank of New York on Tuesday, as the war in the Middle East broke out, consumers expected gasoline and food prices to rise, and short-term inflation expectations in March jumped by the largest amount in a year.

Based on the median of respondents’ replies in the New York Fed’s monthly “Survey of Consumer Expectations,” U.S. consumers expect the inflation rate over the next 12 months to be 3.4%, up 0.4 percentage points from February. Three-year inflation expectations edged up to 3.1%, while five-year inflation expectations remained unchanged at 3%.

The survey was conducted from March 2 to 31 and reflects that consumer pressure increased after the first airstrikes on Iran by the United States and Israel. The war has caused oil prices to spike and brought fresh upside pressure to inflation—over the past five years, the U.S. inflation rate has remained above the Federal Reserve’s 2% target.

Respondents said they expect gasoline prices to rise 9.4% over the coming year, up 5.3 percentage points from before the conflict, reaching the highest level since March 2022. They expect food prices to rise 6% over the coming year, up 0.7 percentage points from the February survey.

Households are more pessimistic about their own financial situation, with the share of households that believe their financial situation has worsened compared with a year ago increasing. The share of households expected to see their financial situation deteriorate over the coming year also rises to the highest level since April 2025.

So far this year, Federal Reserve officials have kept the benchmark interest rate unchanged, and multiple policymakers have said that the current rate level helps balance risks on both employment and inflation. After U.S. nonfarm payroll growth sharply slid in February, according to labor department data released last week, March has shown a rebound.

However, the survey shows that consumers’ views on the labor market are mixed. On the one hand, respondents believe that the likelihood of higher unemployment one year from now is greater, and the risk of unemployment over the next year has also risen slightly. But people also think that opportunities to find work after becoming unemployed have increased.

Some Federal Reserve officials who are concerned that inflation remains high believe that the labor market is stabilizing, and they have hinted that if inflation stays stubbornly above the target level, the Federal Reserve may need to raise interest rates. However, among Fed decision-makers, those holding this view are still in the minority. Based on the pricing of federal funds futures contracts, investors currently broadly expect the Federal Reserve to keep the benchmark interest rate unchanged this year.