A key inflation gauge jumps in March as Iran war-driven gas prices squeeze budgets
AP News • • business
Key Points:
- A key inflation measure rose 0.7% in March, driven by a nearly 21% surge in gas prices, marking the largest annual increase in almost three years at 3.5%, according to the Commerce Department.
- Core inflation, which excludes food and energy, increased 0.3% in March and was 3.2% higher than a year ago, remaining above the Federal Reserve's 2% target.
- Federal Reserve Chair Jerome Powell indicated the central bank is likely to hold interest rates steady for months as it assesses the inflation impact from the Iran war, which has caused a supply shock and pushed up energy costs.
- Despite a 0.6% rise in Americans’ incomes, wage growth is lagging behind inflation, reducing consumers' purchasing power and potentially slowing economic growth.
- Consumer spending increased 0.9% in March, partly due to higher prices, showing some resilience, but experts have downgraded economic growth forecasts for 2024 due to the inflationary pressures linked to the conflict in Iran.
