March's inflation numbers had one story: the Iran war-driven energy price surge that almost single-handedly explains the fire-hot report.

• The worst of the inflation surge in other categories — airfares, groceries and more — is yet to come.

Why it matters: The report captures the first wave of the Iran war's inflationary fallout. Energy shocks transmit through the economy in a sequence that will take more time to play out.

• It means that the squeeze on American household budgets is just starting, with huge uncertainty about whether price increases force a pullback in spending that tips the broader economy into a slowdown.

By the numbers: The CPI overall rose 0.9% last month, the largest increase since June 2022.

• Gasoline prices surged 21% — the biggest monthly jump in 59 years of records! — and accounted for nearly three-quarters of the total gain.
• In the 12 months ending in March, CPI was 3.3% — the highest since May 2024, after being up 2.4% in February.

The intrigue: The core reading, which strips out food and energy prices, was far more benign.

• On a monthly basis, core CPI rose 0.2%, the same pace as the previous month (unrounded, March's gain was actually slightly smaller).
• It was 2.6% in the 12 months ending in March, ticking up from 2.5%. Core CPI was running at an annualized rate of 2.9% over the last three months, cooling down from a 3% pace in February.

What they're saying: "We think it is too early for the market to run with today's positive signal from the core CPI given the strong start to the year for consumer prices — along with the forming clouds that will surely rain on core inflation in coming months," economists at TD Securities wrote in a note.

• The economists noted that rising airfares and a bounce back from soft shelter costs last fall will boost April's core CPI.

The big picture: Under the hood, the energy shock has not registered in other, non-energy-related industries that are bracing for impact.

• Airline fares surged 2.7% in March, picking up from the previous month's 1.4% increase. But it's likely that prices might rise further as airlines continue to pass along higher jet fuel costs to fliers.
• Food prices were flat last month, though farmers and food manufacturers have warned about the effects from shortages of a key type of fertilizer as a result of the effective closure of the Strait of Hormuz.

Flashback: The last time inflation accelerated as quickly as it did in March, the economy was also grappling with the effects of an inflation shock.

• That experience showed that energy pass-throughs are rarely contained to a single month. Russia's invasion of Ukraine in early 2022 sent gasoline prices surging, which bled into higher airfares, grocery prices and other goods in subsequent months.
• A key difference is that the Ukraine war shock landed on an already-overheated economy that was struggling with pandemic-related supply chain challenges.
• This time, consumers have faced about five years of rapid price increases, with no guarantee that they will be as capable — or as willing — to absorb the higher costs.

The first evidence of how Americans view the economy in April is in: People hate it.

The big picture: Even though headline measures of conditions like unemployment and inflation are not that bad, it's remarkable just how pessimistic Americans are at the moment.

Driving the news: The University of Michigan consumer sentiment survey's preliminary reading for April fell 11%, to 47.6.

• If those numbers are maintained when the full data comes out at the end of the month, it would be the lowest on record, below the previous-low reading of 50 at the peak of Biden-era inflation.
• There were steep drops in indexes assessing both current conditions and expectations for the future.
• Consumers' expectations for inflation over the next year surged to 4.8%, from 3.8% in March. Longer-run inflation expectations — of particular concern to the Federal Reserve — also ticked up, from 3.2% to 3.4%.

Of note: The setback in sentiment was widely dispersed, among survey respondents of all ages, income brackets and political affiliations.

• Since February, before the war, sentiment has fallen 10 points among both Democrats (to 31.8) and Republicans (to 87.1).

Between the lines: It is stunning to see consumer sentiment so deeply in the toilet at a time of relatively low unemployment, inflation that is still far below recent highs and a stock market that's holding up reasonably well.

• Extreme public disapproval of the economy — which has been evident in survey data for years now — is looking less like an outgrowth of specific economic developments and more like a generalized fact of how Americans are feeling.

Yes, but: Michigan reports that 98% of survey interviews were conducted before the announcement of a ceasefire in the Iran war on Tuesday.

• "Open-ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy," wrote survey director Joanne Hsu.
• "Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated."