Higher oil price boosts US inflation

The energy price shock has been evident at U.S. stations since early March, and next week, when consumer price statistics are released, they will reveal for the first time just how much overall price levels in the U.S. have risen. Gasoline is likely to be the biggest driver of inflation; adjusted for seasonal fluctuations, it has risen by about 20% from February.

However, the higher energy costs have probably not yet boosted prices for other goods and services, except perhaps to some extent in air travel. But this is likely only a matter of time.

On the other hand, the significant price increases in recent months for computer chips and industrial metals are likely to be reflected in higher prices for some electronics and IT goods. This price pressure was already visible in February at the producer level and in import prices.

Overall, we expect U.S. consumer prices to have risen by 0.9% in March compared to February and by 3.3% from March 2025. In February, the year-on-year rate stood at 2.4%. Excluding energy and food (“core rate”), we expect a 0.3% increase month-on-month and a 2.7% increase year-on-year.

This would likely mark the end of the downward trend in inflation as measured by consumer prices (CPI). In our main scenario of a war lasting until the end of May, inflation is likely to rise to nearly 4% in the coming months. In any case, we have already pointed out on several occasions that consumer prices understate inflation risks. This is because the central bank tends to focus on the personal consumption expenditure (PCE) deflator, to which the 2% inflation target refers. And the PCE inflation rate, which is typically slightly lower than the CPI inflation rate, stood at 2.8% (headline rate) and 3.1% (core rate) even before the energy price shock.

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