WASHINGTON (AP) — The largest monthly jump in gas prices in six decades caused a sharp spike in inflation last month, creating major challenges for the inflation-fighters at the Federal Reserve and heightening already substantial political hurdles for the White House.
Consumer prices rose 3.3% in March from a year earlier, the Labor Department said Friday, up sharply from just 2.4% in February and the biggest yearly increase since May 2024. On a monthly basis, prices rose 0.9% in March from February, the largest such increase in nearly four years.
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A customer pays for gasoline at a Mobil gas station, Wednesday, April 1, 2026, in Miami, Fla. (AP Photo/Marta Lavandier)
Chuck Byrd puts away a fuel nozzel after filling two tanks for a truck at a gas station on Tuesday, April 7, 2026, in Aurora, Ore. (AP Photo/Jenny Kane)
Red & White Crisp Rice cereal is sold for $7.25 per 18-ounce box at a market serving the Central American immigrant community in the Westlake/Pico Union area of Los Angeles, Tuesday, April 7, 2026. (AP Photo/Damian Dovarganes)
Pantry staples, including infant formula and dairy products, are sold at a market serving the Central American immigrant community in the Westlake/Pico Union area of Los Angeles, Tuesday, April 7, 2026. (AP Photo/Damian Dovarganes)
It’s the first read on inflation to capture the effects of the Iran war. The surge in gas prices will stretch the budgets of lower- and middle-income households as it erodes their incomes, making it harder to afford other necessities such as food and rent.
Excluding volatile food and energy, core prices rose 2.6% in March from a year earlier, up from 2.5% in February. And last month core prices rose a modest 0.2%, suggesting that rising gas prices haven't yet spread to many other categories.
A big question for now is how long the oil and gas price shock lasts and whether it will lead to a broader, long-lasting inflation boost, similar to what occurred in the spring of 2022 after Russia invaded Ukraine. For now, economists say that it is unlikely the U.S. will see a widespread increase similar to a few years ago, when inflation topped 9%.
Still, how the war and its impact on inflation will play out in the coming months remains highly uncertain. Despite a tenuous cease fire, little has changed in the Strait of Hormuz, a bottle neck where millions of barrels of oil typically pass daily.
“It’s painful in the near term,” said Michael Pearce, chief U.S. economist at Oxford Economics. “It’s going to get more painful in April,” when further gas price increases will lift inflation higher.
But Pearce said the impact may be shorter-lived than after the pandemic: “I think the conditions are much more like a short, sharp shock than what we saw in 2022.”
Industries that depend on oil and gas are paying more, particularly airlines, which have passed on those higher costs to travelers. Fares jumped 2.7% just last month and are 14.9% higher than a year ago. Many delivery services, including UPS and FedEx, have already announced fuel surcharges that have raised shipping costs for businesses and households.
Grocery prices slipped 0.2% last month and are up just 1.9% from a year earlier, yet economists believe they will move higher in the coming months as diesel fuel prices surge. Most food is shipped by truck.
More expensive fuel is “contributing to rising production costs across the food supply chain and could put upward pressure on grocery prices going forward,” said Andy Harig, a vice president at the grocery trade group FMI-The Food Industry Association. “As energy prices increase, the costs associated with producing and delivering food also rise.”
Clothing costs rose 1% in March from the previous month and are up 3.4% from a year earlier. Used car prices, however, fell 0.4% last month and down 3.2% from a year earlier.
The gas price shock stemming from the Iran war has shifted inflation’s trajectory, from a slow, gradual decline to a sharp increase further away from the Fed’s 2% target. As a result, the central bank will almost certainly postpone any cut in interest rates for months. Many Fed officials will look past the increase in headline inflation, however, and focus on core prices, which are likely to rise more slowly.
If Americans cut back on spending elsewhere in response to more expensive gas, the economy could slow and unemployment may rise.
Consumer sentiment plunged to a record low in April, according to a survey released Friday by the University of Michigan, largely because of the Iran war and concerns over higher gas prices. Their Index of Consumer Sentiment fell to 47.6, from 53.3 in March.
“Many consumers blame the Iran conflict for unfavorable changes to the economy,” said Joanne Hsu, the university's director of consumer surveys.
High prices had angered American voters before the war and the spike in prices for oil and everything that entails, from the pump to the grocery store, could make it more difficult for the president’s party to hold on to seats in both the House and the Senate in this year’s midterms.
Polling by the Associated Press-NORC Center for Public Affairs Research last month found that about six in 10 Republicans are at least “somewhat” concerned about affording gas in the next few months.
Kyle LaFond, the founder of American Provenance, a small manufacturer of personal care products near Madison, Wisconsin, said his shipping costs have already risen between 30% and 40%.
The increases follow tariffs that were also a significant expense, because the company imports coconut oil, shea butter, cocoa butter, and other ingredients. LaFond said he absorbed tariff costs for months, but finally threw in the towel last September and raised prices by 20% to 30% across the board, the first price hike from the company since 2021.
Now, LaFond feels like it’s a repeat of the tariff experience. He is trying to avoid raising prices again, but it depends on how long the fuel price spike lasts. If it continues until early summer, he may have to raise prices again.
“I’d really hate to do that because that would be two years of consecutive price increases, which for us, we’ve never done that before,” he said “But for the business to survive, then that might be necessary.”
Gas prices averaged $4.15 a gallon nationwide Friday, up from $2.98 on the day before the war began and a hike of nearly 40%, according to motor club AAA.
Inflation reached a peak of 9.1% in June 2022, as COVID-19 snarled supply chains and several rounds of stimulus checks pushed up consumer demand. Prices soared for groceries, furniture, restaurant meals and many other goods and services.
This time, economists say the job market and consumer spending are weaker, and there are no large government stimulus checks being issued to spur demand.
“That’s where this really differs, is that we aren’t seeing anywhere near the strength of demand,” Alan Detmeister, an economist at UBS, said. In 2021 and 2022, income growth “was increasing really strongly. We aren't seeing that now,” he added.
A customer pays for gasoline at a Mobil gas station, Wednesday, April 1, 2026, in Miami, Fla. (AP Photo/Marta Lavandier)
Chuck Byrd puts away a fuel nozzel after filling two tanks for a truck at a gas station on Tuesday, April 7, 2026, in Aurora, Ore. (AP Photo/Jenny Kane)
Red & White Crisp Rice cereal is sold for $7.25 per 18-ounce box at a market serving the Central American immigrant community in the Westlake/Pico Union area of Los Angeles, Tuesday, April 7, 2026. (AP Photo/Damian Dovarganes)
Pantry staples, including infant formula and dairy products, are sold at a market serving the Central American immigrant community in the Westlake/Pico Union area of Los Angeles, Tuesday, April 7, 2026. (AP Photo/Damian Dovarganes)
VATICAN CITY (AP) — Pope Leo XIV called Monday for robust regulation of artificial intelligence and for its developers to work for the common good rather than profit, issuing a sweeping manifesto on safeguarding humankind as the technology impacts everything from work to war.
“Magnifica Humanitas” (Magnificent Humanity), Leo’s first encyclical, has been eagerly awaited ever since history’s first U.S.-born pope announced days after his election that he considered AI to be the biggest challenge facing humanity today.
In the text, Leo denounced the “culture of power” driving the AI race, especially in developing ever more sophisticated methods of remote warfare. He declared that it was “not permissible” to entrust irreversible, lethal decisions to AI systems, setting up another flash point between the American pope and the Trump administration, which has worked aggressively to deregulate AI development.
“Artificial Intelligence now demands to be disarmed, freed from logics that turn it into an instrument of domination, exclusion and death,″ the pope told a special Vatican presentation of the encyclical, one of the most authoritative types of teaching documents a pope can issue.
Experts in the tech industry, academia and Catholic morality said the document will likely become a benchmark in the debate over AI, a point of reference for policymakers, researchers and ordinary folk alike. It comes as the near-daily developments in the technology trigger concerns over AI replacing human jobs and even human intelligence.
Taylor Black, a Microsoft AI executive and director of Catholic University of America’s AI institute, said the document would prompt people “at the forefront of these tools” to ask questions such as “What does it mean to be human?”
The Vatican launch also included remarks by the co-founder of Anthropic, which is currently locked in a legal battle with the Trump administration over access to its AI technology. The Vatican decided to involve Anthropic as part of its decade-long effort to engage Silicon Valley in dialogue over the human cost of AI.
And yet in his text, Leo repeatedly blasted the concentration of power and data in the hands of so few people in the private sector as a danger, especially to children and the most vulnerable, and called for external regulation of their work.
“It is not enough to invoke ethics in the abstract; robust legal frameworks, independent oversight, informed users and a political system that does not abdicate its responsibility are required,” he wrote. “A more moral AI is not enough if that morality is determined by a few.”
Leo appealed to AI developers and political leaders responsible for regulating them to slow down and reflect on what they are doing. He urged them to use ethical and spiritual guidelines to make the choice to work not for their own profit or power, but the betterment of humanity.
AI competitors OpenAI and Anthropic are the second- and third-most valuable U.S. private companies, each valued at hundreds of billions of dollars, more than the GDP of many nations. Both companies are heading toward near-trillion dollar IPOs.
Anthropic co-founder Christopher Olah welcomed Leo's criticism and concern. He said such external checks were fundamental to the technology “going well” for humankind since there is so much at stake — “a real possibility that AI will displace human labor at a very large scale.”
“We need more of the world — religious communities, civil society, scholars, governments — to do what His Holiness has done here: to take this seriously, to look closely, and to push events in a better direction,” Olah said. “We need moral voices that the incentives cannot bend.”
In a methodical text, the math major pope traced the history of the Catholic Church’s social teaching and applied its core concepts — justice, solidarity, the dignity of work and the universal destination of resources — to the digital revolution.
“I am convinced that this will prove to be a defining document for our era, a profound and prophetic document,” said Paolo Carozza, law professor at Notre Dame Law School and chair of the Meta Oversight Board.
“Pope Leo is offering a clear, comprehensive, and coherent voice urging us to take responsibility for constructing a world in which technology will serve humans rather than degrade them,” he said.
In its strongest chapters, Leo denounced how AI had helped accelerate the “normalization of war” by desensitizing people to its cost. He didn’t name specific conflicts, but cited “opposing imperialisms, between powers that wish to preserve their supremacy, and those that aspire to seize that supremacy.”
He demanded transparency and accountability by AI developers so that the chain of decision-making command in ordering strikes with AI weaponry is always known. He declared that the Catholic Church’s “just war” theory, which provides specific criteria for when force can be justified, was now “outdated” given the technological advances of warfare.
Leo signed the text May 15, the 135th anniversary of the publication of “Rerum Novarum” (Of New Things), the most important teaching document of Leo’s hero and namesake, Pope Leo XIII. That document addressed workers’ rights, the limits of capitalism, and the obligations that states and employers owed workers as the Industrial Revolution was underway.
It became the foundation of modern Catholic social thought, and the current pope cited it at the start of his pontificate in relation to the AI revolution, which he believes poses the same existential questions that the Industrial Revolution posed over a century ago. “Magnifica Humanitas” thus becomes the latest chapter in a century-long history of popes adapting “Rerum Novarum” to the social questions of their times, often dwelling on the dignity of work for human flourishing.
AI is evoking both existential fears and utopian vision amid an intensifying debate on whether it will become a catalyst that enriches humanity or a technological toxin that dulls human intelligence while wiping out millions of high-paying jobs.
“The pursuit of greater profits cannot justify choices that systematically sacrifice jobs, because the human person is an end, not a means, and the economic order must remain subordinate to human dignity and the common good,” Leo wrote.
Leo extended his concern for upholding human dignity in labor to issue the first-ever papal apology for the Holy See’s own role in legitimizing slavery by giving European sovereigns explicit authority to subjugate and enslave “infidels.”
Vatican officials declined to say who contributed to Leo’s encyclical. But Vatican and church officials have been engaged in a dialogue with Silicon Valley tech firms for a decade.
The decision to include Anthropic at the Vatican launch was criticized by some who considered it a papal stamp of approval of the AI firm, which is currently suing the Trump administration after it ordered all U.S. agencies to stop using Anthropic’s technology for its refusal to allow the U.S. military unrestricted use of it.
Brian Boyd, U.S. faith liaison for the nonprofit Future of Life Institute, read the inclusion of Anthropic’s co-founder Olah as a recognition of its prominence in the field and as similar to a papal audience with a head of state: not an endorsement.
Anthropic is an “enormous corporation that is taking onto itself an enormous risk and responsibility,” Boyd said, adding that the company has “demonstrated genuine goodwill and integrity and interest in dialogue.”
Winfield reported from Middletown, Connecticut, and Huamani reported from Los Angeles. Associated Press writers Kelvin Chan in London and Colleen Barry in Milan contributed to this report.
Associated Press religion coverage receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.
Pope Leo XIV, left, attends the presentation of his first encyclical, "Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence," at the Vatican, Monday, May 25, 2026. (AP Photo/Alessandra Tarantino)
Pope Leo XIV, left, attends the presentation of his first encyclical, "Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence," at the Vatican, Monday, May 25, 2026. (AP Photo/Alessandra Tarantino)
Anthropic co-founder Christopher Olah speaks during the presentation of Pope Leo XIV's first encyclical, "Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence," at the Vatican, Monday, May 25, 2026. (AP Photo/Alessandra Tarantino)
Pope Leo XIV attends the presentation of his first encyclical, "Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence," at the Vatican, Monday, May 25, 2026. (AP Photo/Alessandra Tarantino)
Pope Leo XIV, left, greets Anthropic co-founder Christopher Olah during the presentation of the Pope's first encyclical, "Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence," at the Vatican, Monday, May 25, 2026. (AP Photo/Alessandra Tarantino)
Pope Leo XIV waves to faithful at the end of the Pentecost Mass in St. Peter's Basilica, at the Vatican, Sunday, May 24, 2026. (AP Photo/Gregorio Borgia)
