U.S. Consumer Price Index (March 2026)

Inflation jumps to a near two-year high in March

• The Consumer Price Index (CPI) shot higher by 0.9% month-on-month (m/m) in March, meeting the Bloomberg consensus forecast. On a twelve-month basis, CPI jumped to a near two-year high of 3.3% (from 2.4% in February).
  • A surge in energy costs accounted for more than three-quarters of the monthly gain in headline, led by a 21.2% m/m surge in gasoline prices. Food prices were flat on the month, as a pullback in grocery costs (-0.2% m/m) was offset by a similar gain in "food away from home".
• Excluding food and energy, core inflation rose 0.2% m/m, a tick weaker than consensus, but matching February's gain. On a twelve-month basis, core prices were up 2.6% (from 2.5% in February). 
• Services inflation was up 0.2% m/m, following a gain of 0.3% m/m the month prior. Primary shelter costs heated up at touch, though this was offset by some cooling in non-housing services, which were up just 0.1% m/m – its slowest monthly gain since May 2025. 
• Core goods prices rose 0.1% m/m, as gains in apparel, recreational goods, household furnishings, and new vehicles were partially offset by a steep pullback in medical goods and another decline in used vehicle prices.

Key Implications

• It goes without saying that higher energy prices were going to be a focal point of this morning's release – accounting for most of the gain in headline inflation. While core prices came in a bit softer than expected, it feels a bit backward looking as the surge in energy costs are likely to pressure prices for other goods and services higher in the months ahead. This will be happening alongside the continued passthrough of higher tariff costs, suggesting inflation's near-term direction of travel is likely to be higher. 
• With the labor market appearing to be on a firmer footing, the bar for further rate cuts is set higher. Policymakers can afford to remain patient and sit tight for the time being. Fed futures were largely unchanged following this morning's release and are currently pricing in just 8 basis points of rate cuts by year-end. 

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