PCE Inflation Hits 3.2% as Iran War Drives Oil Prices Higher, GDP Growth Slows to 2%
Quick Look
- US inflation accelerated in March with core PCE rising 0.3% monthly and 3.2% annually, while overall PCE reached 3.5% year-over-year.
- The Iran war's impact on oil prices created new challenges for the Federal Reserve.
- GDP growth in Q1 2026 came in at 2%, up from 0.5% in Q4 2025 but below the 2.2% estimate.
AI-generated summary
Consumers faced escalating prices in March as the Iran war sent oil soaring and created a new level of challenges for the Federal Reserve. The core personal consumption expenditures price index, which excludes food and energy, accelerated a seasonally adjusted 0.3% for the month, pushing the 12-month inflation rate to 3.2%, the Commerce Department reported Thursday. The readings matched the Dow Jones consensus estimates. Including the volatile gas and groceries components saw higher readings, with the monthly gain at 0.7% and the annual rate hitting 3.5%, also in line with forecasts. In other economic news Thursday, the Commerce Department reported that gross domestic product grew at a 2% seasonally adjusted annualized pace in the first quarter, up from 0.5% in the fourth quarter of 2025 but lower than the 2.2% estimate.
