The sight of soaring gas prices at a Chevron station in Los Angeles on March 9, 2026, is more than a local nuisance—it’s a stark symbol of a new economic challenge. With gasoline prices surging amid the ongoing conflict in Iran, Americans are confronting a familiar foe: inflation that shows little sign of abating on its own.
“I don’t get any sense that inflation is decelerating,” said Mark Zandi, chief economist at Moody’s Analytics. “It feels like it’s uncomfortably and persistently high.” He notes that price pressures remain particularly acute for essentials like electricity, food, apparel, medical care, and housing—categories that weigh heavily on household budgets.
This latest Consumer Price Index (CPI) report, however, may already be outdated. The data, which covers the period through February, does not incorporate the inflationary impact of rising energy prices following the U.S.-Israeli attacks on Iran that began on February 28. “It’s a bit stale at this point,” said Joe Seydl, senior markets economist at J.P. Morgan Private Bank. “It’s not incorporating what is the most important [macroeconomic] shock right now.”
The Inflationary Shock of the Iran Conflict
The war in Iran has triggered the largest oil supply disruption in history by choking off flows through the Persian Gulf, a critical corridor for global energy exports. The immediate effect has been a dramatic spike in crude oil prices, which then filters through the entire economy.
Brent crude, a global benchmark, rocketed to $119.50 per barrel in the immediate aftermath of the attacks, up from approximately $70 before the conflict. While it has since receded to around $90 per barrel, the potential for a prolonged crisis keeps the threat of sustained high energy costs alive.
Ripple Effects Across the Economy
Consumers are already feeling the impact at the pump. According to the U.S. Energy Information Administration, average gasoline prices hit $3.50 per gallon as of March 10—the highest since 2024—representing a 19% increase from just two weeks prior.
Economists warn the pain will spread. Higher jet fuel costs are likely to push airfares upward just before the spring and summer travel rush. More expensive diesel fuel will increase transportation costs for goods, potentially keeping food inflation elevated. The conflict’s ultimate impact hinges on its duration and the scale of damage to Middle Eastern energy infrastructure.
A prolonged period of high oil prices would also place the Federal Reserve in a difficult position. “I think the Fed sits on its hands and doesn’t move,” Zandi said, citing the immense uncertainty created by the geopolitical shock.
Scenarios for Oil Prices and Inflation
Economists at Capital Economics outline two primary scenarios. The most likely is a “severe but short-lived” conflict lasting a few weeks, after which U.S. oil prices would gradually fall back toward $60 per barrel by year-end. However, a longer conflict causing even minor infrastructure damage could keep U.S. oil prices averaging around $100 for the rest of 2026.
In the higher-price scenario, the firm estimates CPI inflation could rise to 3.5% by the end of 2026, up from the current 2.4% forecast. Gasoline might approach $5 per gallon, and airline fare inflation could temporarily spike to around 20% from its January level of 2.2%. Agricultural commodities are also at risk due to potential fertilizer shortages, a concern highlighted by the American Farm Bureau Federation in a recent letter to President Trump, which warned of threats to food security and broader inflationary pressures.
The Pre-Conflict Inflation Driver: Tariffs
Before the Iran conflict, the primary source of sticky inflation was the extensive tariff regime implemented by the Trump administration. “It’s primarily tariffs, in our view,” Seydl stated. Analysis suggests that without the “tariff shock” of 2025, U.S. inflation would likely be at the Federal Reserve’s 2% target.
While the Supreme Court recently struck down a key legal justification for some of these tariffs (those levied under the International Emergency Economic Powers Act), the administration quickly re-imposed duties under a different statute. As a result, the effective tariff rate remains near historic highs—approximately 10.5% according to a March 9 Yale Budget Lab analysis, the highest level since 1943—meaning little short-term relief for consumers from this source.
Hidden Factors in the Latest CPI Data
Even the official 2.4% CPI figure may understate the true level of price pressure. Zandi points to a data quirk stemming from the record-long federal government shutdown from October 1 to November 12, 2025. During this period, the Bureau of Labor Statistics could not collect its usual price data. For most categories, the agency assumed no price changes occurred in October, a month when prices likely rose.
“Taking that measurement quirk into account, the CPI inflation is likely around 2.7%, about 0.3 percentage point higher than reported,” Zandi explained. This means the baseline inflation rate was already more problematic than the headline number suggested before the latest energy shock hit.
Navigating an Uncertain Economic Landscape
The confluence of persistent pre-war inflation, high tariffs, and a major geopolitical supply shock creates a complex and uncertain environment. For consumers, the immediate takeaway is higher costs for gasoline, travel, and potentially food. For policymakers, the path forward is clouded, with the Federal Reserve likely to adopt a cautious “wait-and-see” stance as it assesses whether the energy-driven price increases will be transitory or become entrenched in the broader economy.
The images of high gas prices in Los Angeles may be a preview of a longer, more challenging season for American wallets, driven by forces both domestic and abroad.
