Inflation, energy prices and consumer sentiment, borrowing costs, and labor-market data moved in several directions this week as households felt the pinch of higher gasoline prices and policymakers watched for signs of when rate cuts might resume.
The inflation report from the U.S. Department of Commerce showed a sharp increase in March, with the Fed-monitored inflation measure up 0.7% from February and up 3.5% from a year earlier. The report framed the jump as another indication that the Iran war was pushing up the cost of living and making it harder for the Federal Reserve to schedule any interest-rate cuts in the near term.
The Commerce Department also reported that excluding food and energy, core inflation increased 0.3% in March from February, and that core prices were 3.2% higher than they were a year earlier. While the core reading still pointed to moderation compared with the broader figure, it remained above February’s year-earlier level of 3%, the report said.
Fuel prices were a central driver in the week’s story. Gasoline prices rocketed higher and set new multi-year highs for four consecutive days starting Tuesday, with the average price for a gallon of regular climbing to $4.39 after the biggest overnight gain since the war began, before continuing to rise on Saturday. By mid-to-late week, the national average gas price rose another 30 cents over the previous week to about $4.43.
Other economic signals were more mixed. The Commerce Department reported that gross domestic product rebounded to an annualized 2% pace for the January through March period after a lackluster 0.5% pace in the final three months of 2025 that followed the 43-day federal government shutdown. The report said federal government spending and investment grew at a 9.3% annual rate in the first quarter, adding more than half a percentage point to growth after subtracting 1.16 percentage points in fourth-quarter 2025.
Consumer sentiment edged up even as energy costs remained a concern. The Conference Board said its consumer confidence index rose to 92.8 in April from 92.2 in March, with respondents’ comments about prices, oil, gas and the war increasing in April. The report also noted that despite the improvement, the confidence measure remained near its lowest level since the COVID-19 pandemic.
Housing costs moved slightly higher as well. Freddie Mac said the benchmark 30-year fixed rate mortgage rose to 6.3% from 6.23% the previous week, ending a three-week slide. The report said the rate remained below the year-ago average of 6.76%.
Labor-market data provided another point of focus. The U.S. Labor Department reported that unemployment-insurance claims for the week ending April 25 fell by 26,000 to 189,000, bringing filings to their lowest level in more than 50 years, despite economic headwinds that included the Iran war. The report said the number was well below the 214,000 new applications analysts surveyed by FactSet expected, and cited High Frequency Economics for noting the reading was the fewest since September 1969.
Markets ended the week higher after earnings from major technology companies helped support record levels. The report said the S&P 500, Dow Jones Industrial Average and Nasdaq composite all finished the week up, with oil prices continuing to rise even as they moderated on Friday; it also noted that some global markets were closed Friday for May Day.