Higher Gas Prices Caused Inflation To Triple Last Month

Some level of inflation is inevitable in any modern economy, but that doesn’t mean it doesn’t suck to watch everything you buy get more and more expensive. Especially now that it’s so rare to get a real raise or an actual promotion at work. With gas prices way higher than they were before Trump started this senseless war with Iran and groceries so expensive, it certainly feels like things have gotten worse since the end of February, but is that actually born out in the data? CNN reports that according to the latest Consumer Price Index report, inflation tripled last month. Yikes.

Of course, we already knew Americans were paying more at the pump. As of 10 days ago, the war that 80% of Republican voters in ’24 supported had already cost U.S. drivers an extra $10 billion at the pump, and as of April 10, it had already surpassed $17 billion, so at this point, we’re probably looking at a cool $20 billion or so wasted paying higher gas prices. You aren’t paying those higher prices if you drive an EV, but as the CPI report shows, higher transportation costs are driving up prices on other goods and services, too. 

Per the CPI report, inflation hit 3.3% in March, and on a monthly basis, consumer prices rose 0.9%. As far as raw numbers go, those aren’t necessarily the scariest ones a CPI report has ever contained, but what’s especially concerning is how those numbers have changed compared to February. That month, inflation was sitting at 2.4% and only rose 0.3% in that time. So, while a 0.9% jump in inflation might look pretty small at first glance, the inflation rate we saw in March was triple what we saw in February. Even worse, growing inflation nearly eliminated any wage gains seen during the same period.

When you’re dealing with data that attempts to capture nationwide trends in a country of more than 350 million people, explanations usually involve a long list of complex factors and how they intersect. In this case, CNN makes it clear there’s really only one issue that caused inflation to triple in March, and that’s the Republican war with Iran that most Americans want. Aside from titling this article, “Iran war oil shock pushes US inflation to 3.3%. It’s expected to get worse,” CNN also wrote:

Gasoline prices, which rose a record 21.2% during the month, accounted for nearly three-quarters of the overall monthly increase.

…

Ripple effects from the Iran war, which began in late February, have swiftly set back progress on inflation while amplifying longstanding affordability concerns.

Americans’ wage gains, which had been outpacing inflation by roughly one percentage point for nearly three years, quickly were eaten away in March. When adjusted for inflation, average hourly earnings grew at an annual rate of 0.3% March, down from 1.3% in February.

But once the war’s over, whenever that is, at least that’ll get rid of inflation, right? Not exactly. As Navy Federal Credit Union’s chief economist Heather Long told CNN in an interview, “It’s going to get a lot worse before there’s any relief. Even if the war on Iran ends in two weeks, and there’s magically an agreement, inflation will continue to rise for months to come.” That also tracks with previous reporting that suggests gas prices will remain high, long after the Strait of Hormuz opens up, and the hostilities come to an end. 

Huh, it’s almost like Trump lied when he said, “Starting on day one, we will end inflation and make America affordable again. We’ll do that. We’ve got to bring it down.” Because putting Republicans in charge again sure hasn’t ended inflation.

If there’s any good news, it’s the fact that, overall, grocery prices actually fell 0.2% in a month where economists expected an increase. So that’s nice. You might not be able to afford ground beef anymore, now that many parts of the country are paying more per pound than a worker making federal minimum wage earns in an hour, but per the CPI report, prices on other items dropped enough to more than make up for it. That doesn’t help anyone who doesn’t buy those now-cheaper items regularly, but a 0.2% drop is still a 0.2% drop. 

Additionally, if you exclude food and gasoline costs, as well as other volatile categories, CPI only rose 0.2% in March, which was about the same as it was in February, and on an annual basis, underlying inflation only hit 2.6%, up slightly from 2.5% the month before. But those volatile categories are also the ones driving inflation right now, and according to Long, it’s only a matter of time before higher fuel costs drive up prices in other areas. “We haven’t seen it come thro ugh with food yet, in airfares – those are clearly going to go higher – and in transit costs,” she told CNN. “It’s just a matter of time.”

Even before Trump attacked Iran and sent gas prices through the roof, CNN says Republican tariffs and consumer demand that was largely unaffected by tariff-induced price hikes had kept inflation “running higher than normal.” Now, it says “[i]nflation is expected to accelerate in the coming months as the war’s aftershocks ripple beyond gas prices and permeate through a host of commonly purchased goods as well as some services.” So that’s not great.

But while economists appear to generally agree that the cost-of-living line is headed in the bad direction, getting an answer to how rough things are going to get is pretty much impossible at this point. For a long list of reasons, the international community cannot allow Iran to maintain control of the strait, but a ground invasion would likely make things worse before they could potentially get better, and Vance just bungled the peace talks after his physical presence failed to have the same effect on Iran’s diplomats that it had on the late Pope Francis. Until something changes there, it’s impossible to know what the timeline looks like for things to start getting better.