Inflation Persists as Energy Shocks Keep Prices Elevated

Prices remain uncomfortably high as war-driven energy shocks keep inflation above pre-pandemic levels. While wage growth has outpaced inflation in recent years, March data show wages rising about 3.5% while inflation ran 3.3%, eroding real gains. Higher energy costs, frozen housing, and ongoing supply constraints are weighing on households, with savings buffers shrinking (savings rate around 4% in February 2026). Economists think inflation will stay elevated for months, though a recession remains unlikely; the path forward depends on how long the conflict disrupts energy flows through the Strait of Hormuz and the resulting price pressures.