Washington DC [US], April 13: Consumer prices in the United States have risen by nearly 1 percent in March - one of the highest short-term inflation rates in years - largely due to the disruption of the energy markets amid the war on Iran.
A report by the US Bureau of Labor Statistics, released on Friday, showed that inflation in March rose by 0.9 percent, compared with 0.3 percent in February. It was the largest uptick since May 2022, which took place at the height of the cost-of-living crisis prompted by the COVID-19 pandemic.
The March increase was driven by energy prices, with petrol going up by 21.2 percent and fuel oil increasing by more than 30 percent.
"The index for energy increased 10.9 percent in March, the largest monthly increase in the index since September 2005," the government report said.
After the US and Israel launched an all-out war on Iran on February 28, killing the country's Supreme Leader Ali Khamenei, Tehran closed the Strait of Hormuz, sending oil and gas prices across the world soaring.
The price for a barrel of oil reached $120 during the war, up from about $70 on February 27.
In the US, the price of one gallon (3.8 litres) exceeded $4.1. It was less than $3 before the fighting began.
Late on Tuesday, the US and Iran agreed to a two-week ceasefire that would see Iran lift its blockade onHormuz.
But marine traffic in the strategic waterway that connects the Gulf to the Indian Ocean remains at a fraction of its pre-war levels.
On Wednesday, Iran's Fars News Agency said "oil tankers have been suspended from passing through the Strait of Hormuz" in response to the Israeli assault on Lebanon, which killed more than 300 people.
Advertisement US President Donald Trump has warned Iran against blocking the strait or charging vessels for safe passage.
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About 20 percent of the world's oil passed through the Strait of Hormuz before the war.
While the ceasefire has brought relative relief to the global energy market, bringing down the price of oil to less than $100, US consumers are still paying $4.15 on average at the petrol pump, according to the American Automobile Association (AAA). Experts say it will be many months before prices stabilise.
Friday's inflation report came as many politicians in the US are focusing on the cost of living and affordability, before the November midterm elections that will determine control of Congress for the rest of Trump's presidency.
Trump's Democratic rivals have been rebuking him for launching the war without congressional approval, highlighting increased economic costs for Americans.
But the White House has argued that the uptick in petrol prices represents "short-term pain"
that will be offset by the supposed benefits of defeating Iran.
Against that uncertainty and soaring prices, US consumer sentiment plunged to a record low in early April, and consumers anticipated a surge in inflation in the next 12 months, a survey showed on Friday.
The University of Michigan's Surveys of Consumers said its Consumer Sentiment Index tumbled to an all-time low of 47.6 this month from a final reading of 53.3 in March. Economists polled by the Reuters news agency had forecast the index easing to 52.0.
The deterioration in sentiment was across age, income and political party affiliation, though the survey noted that almost all the responses came before the ceasefire agreement.
"Open-ended comments show that many consumers blame the Iran conflict for unfavourable changes to the economy," said Joanne Hsu, the director of the Surveys of Consumers.
The survey's measure of consumer expectations for inflation over the next year jumped to 4.8 percent this month from 3.8 percent in March. Consumers' expectations for inflation over the next five years rose to 3.4 percent from 3.2 percent last month.
Source: Qatar Tribune
