US inflation seen spiking in first snapshot since Iran war

Published Mon, Apr 6, 2026 · 09:02 AM

THE sudden increase in US petrol prices felt by American consumers is set to be on full display in key inflation data due out this coming week. 

Economists are penciling in a 1 per cent increase in the consumer price index for March — the sharpest one-month advance since 2022 — after the Iran war pushed petrol prices at the pump up by about US$1 per gallon. 

At the same time, the core CPI, excluding energy and food, probably rose 0.3 per cent from a month earlier, according to a Bloomberg survey ahead of the Bureau of Labor Statistics report due on Friday. 

Oil prices have been roiled by five weeks of conflict, climbing to almost US$120 a barrel last month as key Middle East energy assets came under attack and Iran effectively closed the critical Strait of Hormuz, creating what the International Energy Agency called the biggest supply disruption in the history of the market.

Opec+ warned on Sunday that damage to Middle East energy assets will have a prolonged impact on oil supply even after the Iran war ends, as it approved a symbolic increase in output quotas for next month.

A day ahead of the CPI, the Federal Reserve’s preferred gauge of inflation will offer a snapshot of pre-war price pressures. Economists see the so-called core personal consumption expenditures — PCE — price index, which excludes food and energy, having risen by 0.4 per cent for a third month in February, suggesting progress toward tamer inflation was stalling even before the conflict.

Combined with signs of stabilisation in the US labour market, stubborn price pressures along with new inflation risks stemming from war in the Middle East help explain why the Fed may struggle to lower interest rates this year.

The mid-week release of minutes from the central bank’s March policy meeting may shed light on officials’ concerns about inflation or the potential economic impacts stemming from the Iran conflict and related disruptions to energy and other commodity flows. 

In addition to the PCE price data, the Bureau of Economic Analysis’ report will include figures on personal spending as well as incomes. Economists expect a modest increase in inflation-adjusted spending.

Other reports in the coming week include the Institute for Supply Management’s March services activity index, due on Monday. And on Friday, the University of Michigan will issue its preliminary April consumer sentiment index.

In Canada, the March labor force survey will offer a first look at how surging energy costs may be filtering through to job growth and unemployment. Economists expect the jobless rate to tick up to 6.8 per cent.

Elsewhere, central banks from Poland to India and New Zealand may keep policy steady as they monitor events in the Middle East, while inflation gauges from China to Latin America will point to the impact on living costs.

Asia gets three rate decisions this week, with the focus falling on how authorities assess risks to prices and growth from the Middle East conflict. 

The Reserve Bank of New Zealand is expected to hold its cash rate at 2.25 per cent on Wednesday for a second straight meeting after Governor Anna Breman said she won’t rush into raising the benchmark in response to the Iran war. 

Pricing in the overnight swaps market shows traders see a roughly 58 per cent chance of an increase by the meeting in July, though economists see a longer hold. 

On the same day, India’s Reserve Bank is forecast to keep its repurchase rate steady at 5.25 per cent, while on Friday, the Bank of Korea — in the final meeting of Governor Rhee Chang Yong’s tenure — is all but certain to keep settings unchanged as well. 

Data highlights include inflation updates from the Philippines, Thailand and Taiwan. China’s key inflation gauges for March, due Friday, will likely reflect the impact of soaring energy costs. 

Consumer inflation may accelerate again after picking up to the fastest pace in three years in February. Likewise, factory-gate deflation may narrow further after registering the slowest clip in more than a year in the previous month. 

Japan releases wage data for February on Wednesday, with a focus on the inflation-adjusted gauge after it turned positive in January for the first time in more than a year. 

Singapore releases retail sales figures for February on Monday, and New Zealand’s manufacturing PMI for March is due on Friday. BLOOMBERG