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US inflation hits 1967 levels before blockade

3 min read

11:20UTC

March US consumer prices rose at the fastest rate since Lyndon Johnson was president, with gasoline the primary driver, and these figures predate the blockade.

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Key takeaway

The worst US inflation in nearly 60 years was recorded before the blockade began.

The Bureau of Labor Statistics reported March US CPI (Consumer Price Index) rose 0.9% month-on-month, the largest increase since 1967 ¹. Gasoline climbed 21.2%. The University of Michigan consumer sentiment index hit an all-time low of 47.6. These figures capture the accumulated effect of Hormuz disruption through early April; the blockade, which began on Sunday, will compound April data further.

A Michigan sentiment reading of 47.6 is historically extreme. The index last sat this low during the 1980 recession and the 2008 financial crisis. Recovery in both cases required either rate cuts or falling energy prices. Neither is available with Hormuz traffic near zero and GL-U expiring in six days .

Friedrich Merz, Germany's Chancellor, cut petrol and diesel tax by 17 euro cents per litre for two months, the first European fiscal response directly tied to the war's fuel price shock . The intervention signals the political urgency in coalition governments facing petrol-price revolts across the continent.

Deep Analysis

In plain English

March was the worst month for price rises in the United States since 1967 , nearly 60 years ago. The main driver was petrol, which cost 21% more than the previous month. These are the figures collected before the blockade began, so they represent the damage already done. A separate survey by the University of Michigan asked Americans how confident they felt about the economy. The answer , 47.6 out of 100 , was the lowest ever recorded. Lower than during the 2008 financial crisis. Lower than during any previous energy shock. The practical implication: whatever April's figures show, they will be worse, because the blockade's fuel price spike happened after March's numbers were collected.

What could happen next?

Consequence
April US CPI will compound March: the blockade announcement added 8% to Brent on a single day, and that passthrough reaches petrol stations by end-April and core CPI by May-June, creating three consecutive months of historically high inflation regardless of how the conflict resolves.
Risk
A University of Michigan reading of 47.6 historically precedes consumer spending contraction within 2-3 months. If spending drops while energy-driven inflation persists, the US enters a stagflationary dynamic not seen since 1979-80.

Source Landscape

This story draws on mixed-leaning sources from United States

United States

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Primary parallel: The 1973-74 first oil shock saw US CPI rise from 3.3% to 12.2% in 18 months, with gasoline as the primary driver. The Federal Reserve tightened into the shock, producing the 1974 recession.

The parallel mechanism , energy price shock into core CPI via transportation costs , is the same in 2026. The critical difference is the starting point: 1973 inflation was already rising from 3.3%; 2026 inherited a post-2022 disinflation that had not fully completed before the war began.

Counter-parallel: The 2022 Russia-Ukraine energy shock sent UK CPI to 11.1% peak but US CPI only to 9.1%, and both resolved without the recession that 1974's Fed-tightening produced , because the shock was relatively brief (12-18 months) and supply-side rather than demand-driven. The 2026 shock is so far shorter in duration but physically more acute: Hormuz is a harder choke than Russian gas.

The March CPI captures only three weeks of Hormuz disruption at reduced-transit levels, before the blockade. April CPI will capture the blockade's full energy passthrough, including the 8% Brent jump on 13 April. The typical lag from oil prices to petrol station prices is 10-14 days; from petrol to core CPI is 4-6 weeks.

The 0.9% monthly reading annualises to 11.4% , the highest annualised rate since January 1975. The University of Michigan's 47.6 reading is the critical forward signal: the last time it sat this low was July 2022 (at 51.5) and Q1 2009 (at 56.3). In both cases, the recovery required either rate cuts or falling energy prices. Neither is available under blockade conditions.

Germany's 17-euro-cent per litre fuel tax cut is a direct fiscal response to this dynamic , the first European government to absorb part of the shock through tax expenditure rather than monetary tightening.

Consensus view: The Peterson Institute for International Economics (Karen Dynan) and the Federal Reserve Bank of New York (nowcast team) both assess the March CPI print as the beginning of a multi-month energy passthrough, not a single-month anomaly.

The gasoline component (+21.2%) feeds the 'shelter' and 'transportation services' components with a 1-2 month lag, meaning even if oil prices stabilised at Monday's $103, April and May CPI prints would continue rising from the March base. The University of Michigan's 47.6 consumer sentiment reading is the forward-looking confirmation: expectations are deteriorating faster than actual price levels.

Counter-view: The Cato Institute's Jai Kedia argues the Federal Reserve's credibility on inflation has sufficient reserve to prevent a 1970s-style wage-price spiral: unlike 1967, unions cover only 10.1% of the US workforce, reducing the wage-indexation mechanism that caused sustained inflation in the Johnson and Nixon years. He concedes that energy price shocks of this magnitude are different from the core inflation dynamics The Fed's models assume.

Key tension: Whether the war-driven energy shock is temporary (resolves when Hormuz reopens) and therefore The Fed should hold rates, or whether it is structural enough (entrenched expectations, wage indexation in some sectors) to require monetary tightening that would impose a recession on top of the energy shock.

Sources:CNN Business·CNN Business

Mentions:University of Michigan Consumer Sentiment Index →University of Michigan →Goldman Sachs →Bureau of Labor Statistics →Prima →Nixon →Friedrich Merz →Russia →Consumer Price Index →Germany →Ukraine →Federal Reserve →Peterson Institute for International Economics →United States →General License U →

First Reported In

Update #67 · Trump blockades Iran on a tweet

CNN Business· 13 Apr 2026

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Different Perspectives

Oil market and P&I insurers

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