U.S. Inflation Up 0.7% in March on Gas Prices

U.S. inflation accelerated sharply in March, driven by soaring gasoline prices amid the war in Iran, the Commerce Department reported Thursday. The personal consumption expenditures price index, the Federal Reserve's preferred gauge, rose 0.7 percent from February, up from a 0.4 percent increase the prior month. On a yearly basis, prices climbed 3.5 percent through March, the largest annual gain in nearly three years and well above the Fed's 2 percent target.

Core inflation, excluding volatile food and energy prices, increased 0.3 percent in March and 3.2 percent over the past year, surpassing February's annual reading of 3 percent. Gasoline prices jumped nearly 21 percent from the previous month, pushing the national average to $4.22 per gallon Thursday, according to AAA data. That marked a rise from $2.98 before the war began. U.S. oil prices topped $105 per barrel Thursday, compared with about $67 prior to the conflict. Grocery prices dipped 0.1 percent, while clothing costs rose 1 percent in March alone.

The Federal Reserve, which held its key short-term interest rate steady Wednesday after three cuts last year, signaled it would likely pause further reductions. "We're very...