Inflation Research Brief

Oil spike clouds inflation outlook. February inflation data showed prices stayed contained before the Iran shock, with headline CPI up 0.3 percent month-over-month and 2.4 percent year-over-year, while core CPI rose 0.2 percent and 2.5 percent, respectively. Services inflation remained moderate, and tariff pass-through into goods was limited. Yet the data predates the Iran conflict and Strait of Hormuz closure, which has pushed the national average gas price up nearly 20 percent since Feb. 28 and will likely lift March headline inflation. Higher fuel costs may also raise prices in freight-sensitive categories such as food. For the Federal Reserve, the key question is how much of that shock reaches core inflation, which usually rises less than headline as higher gas and food costs squeeze spending elsewhere