US wholesale prices surged 4% last month after the war in Iran sent
energy prices flying
[April 15, 2026] By
PAUL WISEMAN
WASHINGTON (AP) — U.S. wholesale prices surged last month as the Iran
war drove up the cost of energy.
The Labor Department reported Tuesday that its producer price index —
which measures inflation before it hits consumers — rose 0.5% from
February and 4% from March 2025. The year-over-year gains was the
biggest in more than three years. Energy prices surged 8.5% from
February.
Excluding volatile food and energy prices, so-called core producer
prices rose a modest 0.1% from February and 3.8% from a year earlier.
The gains in wholesale prices were smaller than economists had forecast.
The surge in prices complicates the work of the inflation fighters at
the Federal Reserve, who have faced intense pressure from President
Donald Trump to lower their benchmark interest rate. But some Fed
policymakers are inclined to raise rates instead, as higher energy costs
increase the inflation threat.
Food prices, which will most certainly be front and center in next
year's midterm elections, fell by 0.3% in March after surging by 2.4% in
the previous month.
Wholesale prices can offer an early look at where consumer inflation
might be headed. Economists also watch it because some of its
components, notably measures of health care and financial services, flow
into the Fed’s preferred inflation gauge — the personal consumption
expenditures, or PCE, price index.
The most recent peek at inflation in the U.S. validates a recent shift
by the U.S. Federal Reserve to intensify its focus on rising costs,
wrote Carl Weinberg, the chief economist at High Frequency Economics.
“The decline in food prices is overdue, and welcome news for everyone,”
Weinberg said Tuesday. “Food price increases are at the core of
political arguments over affordability.”
The Labor Department reported last week that soaring gasoline prices
pushed consumer prices up 3.3% last month from a year earlier, the
biggest year-over-year increase since May 2024. Compared to February,
March consumer prices jumped 0.9%, biggest gain in nearly four years.
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 The war in Iran and soaring energy
prices will lead to an annual decline in oil demand for the first
time since the pandemic, when billions of people were trying to live
in isolation, according to a forecast Tuesday by the International
Energy Agency.
The agency, formed after the 1974 oil crisis, said
that oil demand is expected to decrease by an average of 80,000
barrels a day this year, a sharp revision from the increase of
850,000 barrels a day that it had forecast before the war began.
The drop-off in March was particularly severe because of attacks on
energy infrastructure and the shutdown of the Strait of Hormuz,
according to the IEA, which expects a decline in demand of 1.5
million barrels in the current quarter.
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.”
“So the conflict will end, prices will come down, and then headline
inflation will come down, and with that, gasoline prices will come
down," Bessent said. "We’ve seen them edging back down in the past
10 days.”
The average price for a gallon of regular gasoline in the U.S. has
declined about 3 cents in that time span but it remains well above
$4 per gallon, and costs about 30% more per gallon than it did at
this time last year.
And there is no definitive end date for the conflict. Washington
enacted its blockade of Iranian ports this week while Tehran
threatened to strike targets across the region. Diplomats on Tuesday
continued attempts to arrange a new round of peace talks between the
United States and Iran.
_____
AP Reporters Michelle Chapman in New York City, and Fatima Hussein,
in Washington, contributed to this report.
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