April 9, 2026 / 5:00 AM EDT / CBS News
The fight against inflation looks likely to suffer a setback because of the war with Iran.
Economists surveyed by CBS News expect the Consumer Price Index for March to show prices rising at a 3.3% annual rate, the average of six forecasts. That would be the highest inflation pace since May 2024 and nearly a full percentage point above February. The CPI report is due at 8:30 a.m. ET on Friday.
Oxford Economics warned the conflict’s impact on energy will push headline CPI “well above 3% in March and above 4% by April.” Energy costs have surged since hostilities began, with Pantheon Economics saying the U.S. saw its largest one-month jump in fuel costs since at least 1957. Even a two-week ceasefire between the U.S. and Iran is unlikely to immediately relieve global energy shortages.
Rising fuel prices feed through many parts of the economy — from higher transport costs for food to pricier airline tickets — and tend to spike quickly but fall slowly afterward, a behavior economists call the “rockets and feathers” effect.
“We’re going to be paying the price for this through much of the year,” said Mark Zandi, chief economist at Moody’s Analytics, citing likely increases in travel and grocery costs. Inflation had cooled to a 2.4% annual rate in the first two months of 2026, still above the Federal Reserve’s 2% goal but far below the 9.1% peak in June 2022.
After the U.S. announced a truce, the U.S. oil benchmark fell nearly 15% to about $96.41 a barrel, but that price remains roughly 43% above pre-war levels, suggesting consumers may see limited near-term relief. The Joint Economic Committee’s Democratic minority estimated consumers paid an extra $8.4 billion in fuel costs in the month following the conflict’s start. Higher energy costs can also translate into broader household pain through increased prices for goods and services and upward pressure on interest rates.
Those pressures could reduce discretionary spending. Federal Reserve Bank of Chicago President Austan Goolsbee told CBS News that if households pull back, it could ripple through the economy because consumer spending accounts for roughly 70% of GDP.
Signs of household strain were appearing even before the Iran war. Elizabeth Pancotti of Groundwork Collaborative noted rising 401(k) hardship withdrawals, lower savings rates, stagnating wage growth, and rising delinquencies — suggesting that added inflationary shocks could move conditions from warning signs to “major flashing alarm bells.”
Businesses face impacts too. Disruptions through the Strait of Hormuz affect about 20% of global energy shipments and also disrupt flows of other commodities such as helium, aluminum and fertilizer. Ranchers and farmers face higher freight and input costs; Andrew Coppin, CEO of Ranchbot, said rising shipping and fertilizer costs are already pushing up producers’ expenses and that beef prices are likely to rise this year.
On interest rates, the Fed is balancing higher inflation against a labor market that has swung between monthly job losses and gains. In March, the Fed had penciled in one rate cut for 2026, but growing expectations of sustained inflation have led many economists to remove that cut from their forecasts. Heather Long, chief economist at Navy Federal Credit Union, said the Fed is likely to remain on a prolonged pause “until the fog of war clears and they can assess the full impacts on the U.S. economy.” Minutes from the Fed’s March meeting indicate some policymakers believe it may become necessary to consider a future rate increase.
One easing factor for inflation is that the effect of tariffs imposed by the Trump administration appears to be diminishing. The effective tariff rate has fallen to about 8% from a 21% peak in April 2025, according to the Yale Budget Lab, and Oxford Economics’ Bernard Yaros said most tariff pass-through has already occurred.
Edited by Alain Sherter