Inflation likely to spike in coming months after tame February reading

11/03/2026

Inflation likely to spike in coming months after tame February reading

Gas prices are displayed on March 9, 2026, in Los Angeles. (AP)

WASHINGTON, March 11, (AP): Inflation likely was elevated last month even before the spike in oil and gas prices of the past two weeks that is expected to send consumer costs soaring in the months ahead.

Consumer prices are forecast to have risen 2.5% in February from a year earlier when the Labor Department reports last month’s figures Wednesday, according to a survey of economists by data provider FactSet. That would be up slightly from 2.4% in the previous month. Core prices, which exclude the volatile food and energy categories, are expected to have also risen 2.5% in February, matching January’s figure for the lowest in five years.

But the data will represent an already-faded snapshot of inflation before the Iran war was launched Feb. 28, which has caused violent gyrations in oil prices as shipping lanes through the Persian Gulf have suffered a rare shutdown. Gas prices have already jumped and are expected to push inflation much higher when March figures are released next month.

The price spike will unnerve the inflation fighters at the Federal Reserve and could slow consumer spending and weigh on the broader economy. The increase could be a one-time event and potentially reverse if the war ends soon, as President Donald Trump has hinted. But the spike in gas prices threatens to worsen inflation for at least a few months even as Americans are already weary from nearly five years of stubbornly high prices that have made “affordability” a thorny political issue for congressional Republicans who will soon face voters in midterm elections later this year.

Oil prices soared as high as nearly $120 a barrel late Sunday before rapidly falling back Monday after Trump suggested that the conflict would be a “short-term excursion.” Still, he has also threatened ongoing attacks and it isn’t clear when the conflict might end.

Some analysts warn prices will move much higher if the Strait of Hormuz remains closed, which has removed roughly three-quarters of the Persian Gulf region’s oil production from world markets, according to Wood Mackenzie, an energy analytics firm. Oil prices could soar to $150 a barrel in the coming weeks, the firm forecasts, if shipments don’t resume.

That would push gas prices still higher in the United States, where they jumped to $3.54 a gallon on average nationwide Tuesday, according to AAA, an increase of about 20% just in one month.

Over time, higher gas prices will lift some other costs as well, including air fares and shipping costs, which could make groceries and restaurant meals more expensive.

At the same time, given the ups-and-downs of oil prices — US crude prices fell nearly 9% to $86.55 Tuesday afternoon — it is difficult to forecast how big the impact will be over time. If shipments resume in a week or so, gas prices will likely decline fairly soon, though they typically fall much more slowly than they rise.

Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, a consulting firm, expects inflation could jump by as much 0.8% or 0.9% just in March from the previous month, when that data is reported next month. It would be the largest monthly gain in nearly four years. Yearly inflation could easily surpass 3% in that case and potentially near 4% in the following months.