What was inflation before the war?
The February 2026 CPI showed inflation was relatively stable:
- Overall CPI: Up 0.3% month-over-month, 2.4% year-over-year
- Core CPI (excluding food and energy): 2.8% annually
- Food costs: Up 3.1% annually (faster than headline inflation)
- Energy: Was actually declining before the war
This data was captured before the US-Israel strikes on Iran began on February 28. (NBC News) (CNN)
How will the war change inflation?
The war has already triggered massive energy price increases:
- Gas prices: Jumped from $2.97 to $3.57/gallon (a 60-cent increase in two weeks)
- Heating oil: Up 19% to $5.09/gallon
- Crude oil: Brent hit nearly $120/barrel before settling around $90
Energy costs feed into virtually every consumer price — from food to clothing to online orders. Economists expect the March CPI to show a significant jump. (Axios)
Will the Federal Reserve cut interest rates?
Don’t count on it. Analysts warn that the Fed is unlikely to “ride in and save the day” with rate cuts while inflation is being driven higher by the war. The Fed faces a difficult choice:
- Cut rates to help the economy but risk fueling inflation further
- Hold rates to fight inflation but risk tipping into recession
(CNBC)
What does this mean for my wallet?
Based on current trajectories:
| Category | Pre-war trend | Expected impact |
|---|---|---|
| Gasoline | Declining | Up 20-40% |
| Groceries | +3.1%/year | Could hit 5-6%/year |
| Rent | Stable | Gradually rising |
| Restaurants | +3.9%/year | Accelerating |
| Energy bills | Stable | Up 15-25% |
| Online shopping | Flat | Shipping surcharges coming |
(PBS News) (Retail Brew)
How long will higher prices last?
Higher energy prices typically take 3-6 months to fully work through the economy. Even if the war ends soon, prices for food, goods, and services will stay elevated as businesses pass on higher costs they’ve already absorbed.