U.S. inflation accelerated sharply in March, reaching its highest level in almost two years, driven largely by soaring gasoline prices linked to the war with Iran.

The Consumer Price Index rose 0.9% in March from February, the largest monthly increase since June 2022. On an annual basis, inflation climbed to 3.3%, up from 2.4% in February, according to data released Friday by the U.S. Department of Labor.

Energy prices were the main driver. Gasoline prices jumped 21.2% in just one month, the largest monthly increase at U.S. gas stations since 1967. The increase in fuel prices accounted for nearly three-quarters of the overall rise in inflation in March.

The price surge followed the escalation of the conflict involving the United States, Israel and Iran, which sent global oil prices sharply higher and disrupted shipping through the Strait of Hormuz. Rising energy costs quickly spread into transportation, food and other consumer goods.

Core inflation — which excludes food and energy — rose much more moderately, increasing 0.2% in March and 2.6% year over year. That suggests the inflation spike was concentrated mainly in fuel costs rather than across the broader economy.

The figures create a new challenge for the Federal Reserve, which had been considering possible interest rate cuts later in 2026. Following the March inflation report, economists now believe the central bank may keep rates higher for longer.

The inflation spike also complicates the political outlook for Donald Trump and the White House, as rising gasoline prices tend to have an immediate effect on consumers and voter sentiment.