A key inflation measure jumped in March as gas prices soared, the latest sign that the Iran war is pushing up the cost of living and delaying any interest rate cuts by the Federal Reserve

Luciano V. replaces the fuel nozzel after filling the tank of their 1999 Mazda Miata at an Astro gas station on Wednesday, April 29, 2026, in Portland, Ore. (AP Photo/Jenny Kane)

WASHINGTON (AP) — A key inflation measure jumped in March as gas prices soared, the latest sign that the Iran war is pushing up the cost of living and delaying any interest rate cuts by the Federal Reserve.

An inflation gauge monitored by the Fed rose 0.7% in March from February, up slightly from the previous month. Compared with a year ago, prices rose 3.5%, the biggest increase in almost three years.

Excluding the volatile food and energy categories, core inflation rose 0.3% in March from February, and it was 3.2% higher than a year earlier. The annual figure is above February’s reading of 3%.

Rising gas prices have caused inflation to move further away from the Fed’s 2% target, which has caused the central bank to keep its key short-term interest rate unchanged after cutting it three times last year. The Fed typically keeps rates elevated — or even raises them — to combat higher inflation.