U.S. Wholesale Prices Jump 4% as Iran War Lifts Energy Costs

WASHINGTON — U.S. wholesale prices surged last month, and the culprit is pretty plain in the data: energy costs tied to the war in Iran are still moving the numbers.

The Labor Department reported Tuesday that its producer price index — a key inflation measure that tracks prices before they reach consumers — rose 0.5% from February and 4% from March 2025. That year-over-year gain was the biggest in more than three years. Energy prices jumped 8.5% from February, a swing big enough to make the broader inflation conversation feel less settled than policymakers would probably like.

Core producer prices, which strip out volatile food and energy, climbed only 0.1% from February and 3.8% from a year earlier. The mix matters, too: the wholesale surge was smaller than economists had forecast, but it still landed as yet another reminder that prices aren’t cooling in a straight line. For the Federal Reserve, this is the kind of development that can turn a careful debate into a harder one.

The Fed has faced heavy political pressure from President Donald Trump to lower its benchmark interest rate. Still, some Fed policymakers are leaning the other way, arguing that higher energy costs keep the inflation threat alive. And the timing isn’t great. Food prices — which tend to become a headline in every election cycle — fell by 0.3% in March after surging 2.4% the month before. Misryoum newsroom reported that the volatility is exactly what makes forecasting tricky, because consumers feel the swings immediately.

Wholesale prices are often treated as an early warning system for consumer inflation. Some categories within the index — including components tied to health care and financial services — feed into the Fed’s preferred inflation gauge, the personal consumption expenditures, or PCE, price index. At a grocery store in Schaumburg, Ill., Thursday, April 2, 2026, the normal bustle and everyday routines were underway while prices and affordability arguments keep circling back. You could almost hear the day-to-day rhythm in the background — the carts rolling, people talking over lists — while the economic numbers get debated upstairs.

Misryoum editorial desk noted that the latest inflation read also supported a shift the Fed has been making toward paying closer attention to rising costs. Carl Weinberg, the chief economist at High Frequency Economics, wrote that the decline in food prices is overdue, and that food price increases sit at the core of political fights over affordability. Misryoum newsroom reported that last week’s Labor Department release also showed consumer prices rising 3.3% last month from a year earlier, driven by soaring gasoline prices, and up 0.9% compared to February — the biggest jump in nearly four years.

Meanwhile, the war itself is feeding into energy expectations. Misryoum analysis indicates that an annual oil demand decline is expected for the first time since the pandemic, according to a forecast Tuesday by the International Energy Agency. The agency, formed after the 1974 oil crisis, said demand would decrease by an average of 80,000 barrels a day this year, sharply lowering a prior forecast it had made before the war began. The agency also pointed to a particularly severe March drop tied to attacks on energy infrastructure and the shutdown of the Strait of Hormuz, expecting a decline of 1.5 million barrels in the current quarter.

Higher gasoline prices were still visible on the ground. Higher gasoline prices are seen at a Shell gas station a half-mile from the Tulalip Indian Reservation, Wednesday, April 8, 2026, in Marysville, Wash. And while the political focus is on inflation, the lived experience is the pump: Misryoum newsroom reported that the national average price for a gallon of regular gasoline has declined about 3 cents over the past 10 days, but remains well above $4 per gallon and about 30% higher than it was a year ago.

Treasury Secretary Scott Bessent told reporters Tuesday that “a small bit of economic pain for a few weeks is worth taking off the incalculable tail risk of the either a nuclear Iran or a nuclear Iran that uses that weapon.” He said the conflict will end, prices will come down, and headline inflation — including gasoline — should ease. But there is no definitive end date. Washington enacted its blockade of Iranian ports this week while Tehran threatened to strike targets across the region, and diplomats continued attempts to arrange a new round of peace talks between the United States and Iran. That uncertainty keeps hovering over every inflation calculation, even when food prices dip a bit.

Florida Doctor Charged After Fatal Wrong-Organ Surgery

Redistricting maps could reshape Texas, California, Missouri, NC, Utah seats

Americans say taxes feel too high—data paints a fuller picture