The latest Commerce Department report, released Thursday, states that consumers experienced rising prices in March due to the Iran war, which caused oil prices to surge and posed new challenges for the Federal Reserve.
The core personal consumption expenditures price index, excluding food and energy, rose by a seasonally adjusted 0.3% in the month, leading the 12-month inflation rate to 3.2%, according to the Commerce Department report.
Including the volatile gas and groceries components resulted in higher readings, with the monthly increase at 0.7% and the annual rate reaching 3.5%, also aligning with forecasts.
The Commerce Department also announced that the gross domestic product increased at an annualized rate of 2% in the first quarter, revised upward from 0.5% in the fourth quarter of 2025 but still below the expected 2.2%.
The economy’s growth pace likely supports financial market expectations that the Federal Reserve will hold interest rates steady, possibly into 2027, as long as there is no deterioration in the labor market.
Economists expect the war in the Middle East to impact economic growth starting in the second quarter.
By CEO NA Editorial Staff
