Energy Drove March Inflation to a Two-Year High. The Cost Lines That Matter Most to Walmart Suppliers Run Deeper.

The consumer price index rose 3.3% year over year in March 2026, the Bureau of Labor Statistics reported Friday, the highest annual rate since April 2024 and up sharply from 2.4% in February. It is the first CPI reading since the Iran war began on February 28, and it captures the first full month of the conflict’s effect on consumer prices. The increase was almost entirely energy-driven. The all-items index rose a seasonally adjusted 0.9% for the month, pushed by a 10.9% surge in energy costs. Core prices, all items excluding food and energy, rose just 0.2% for the month and 2.6% from a year ago, both 0.1 percentage point below forecast.

That split between headline and core is the most important structural fact in the report. The headline captures a specific, geopolitically driven energy shock. The core number shows underlying inflation running near the Federal Reserve’s target. For Walmart suppliers and Marketplace sellers, the category-level data and the cost mechanisms it activates are where the report becomes directly relevant.

Energy Is Doing Almost All the Work. Other Categories Tell a Different Story.

Retail gasoline prices rose 18.9% year over year, according to the BLS. The U.S. Energy Information Administration’s most recent weekly data put the national average at $4.12 per gallon, up from about $2.94 before the war started and the first time the national average has exceeded $4 since Russia’s 2022 invasion of Ukraine sent prices soaring.

Airfares rose 14.9% year over year. Airlines have raised ticket prices, increased bag fees, added fuel surcharges, and cut flight schedules to offset higher jet fuel costs. Deutsche Bank analysts, as cited by CNBC, estimated that if jet fuel prices hold near current levels for a full year, airlines would need to raise one-way ticket prices by roughly 17% to cover the cost.

Food prices rose 2.7% year over year. The BLS noted that beef and coffee have seen steeper increases due to supply constraints unrelated to the conflict. Grocery prices slipped 0.2% for the month of March, though economists cited in the report expect upward pressure in the coming months as diesel costs filter through trucking and food distribution.

Household furnishings and operations rose 4.0% over the year. Medical care rose 3.1%. Shelter rose 3.0%. Personal care and used vehicles declined month over month.

Collect Suppliers Already Have This Cost on Their Next Invoice

Iran’s closure of the Strait of Hormuz disrupted a waterway that handles about a fifth of global oil supply. Brent crude spiked to $118 per barrel by the end of March from roughly $70 before the conflict began. A two-week ceasefire was announced April 8. As of Friday, Brent was trading near $96. The blockade appeared to remain largely intact even after the ceasefire announcement, according to reports.

For 1P suppliers on Collect terms, the relevant mechanism is Walmart’s Fuel Management Program, which passes real-time fuel costs through to Collect suppliers as monthly deductions from COGS invoices. The calculation runs automatically against actual freight movements and current diesel pricing. It does not require an announcement from Walmart to adjust. Whatever diesel cost in February and March is already embedded in upcoming invoice deductions. Walmart has not announced any changes to the FMP in response to current energy prices.

The only structural alternative to FMP exposure is converting to prepaid shipping terms, which shifts OTIF compliance, warehouse allowances, and return accountability to the supplier. That trade-off will not work for every vendor, but suppliers on short, dense lanes with favorable carrier relationships may find it worth examining while diesel remains elevated.

Marketplace Sellers Face a Confirmed Surcharge and a Contingent One

For 3P sellers using Walmart Fulfillment Services, Walmart’s published fee schedule contains a fuel surcharge clause allowing a charge of up to 7% of the fulfillment fee if gas prices rise above a specified threshold. Walmart has not announced activation of that clause.

Amazon announced a 3.5% fuel and logistics surcharge for third-party sellers effective April 17 and did not specify what criteria would need to be met before removing it, saying only it would be in place for the foreseeable future. Sellers cross-listed on both platforms need to model unit economics under the Amazon surcharge and treat the WFS clause as a live scenario in near-term planning.

Seller-fulfilled Marketplace sellers carry carrier surcharge exposure directly on every outbound shipment. FedEx was charging a 26.5% ground fuel surcharge as of April 6, adjusted weekly against the prior week’s national diesel average as reported by the EIA. UPS confirmed changes to its fuel surcharge structure effective March 2, 2026, with weekly adjustments tied to the national on-highway diesel price. USPS is implementing an 8% surcharge on packages set to remain through at least January 17, 2027, a timeline that holds regardless of how energy prices move between now and then.

The Food Cost Story the March Report Does Not Yet Show

The March CPI captured grocery prices through the end of the month. It does not yet reflect the fertilizer shock building in the agricultural supply chain, one that will matter specifically to Walmart grocery and consumables suppliers later in the year.

More than one-third of globally traded fertilizer passes through the Strait of Hormuz. Commercial traffic through the route was largely halted starting in late February, disrupting shipments during the Northern Hemisphere spring planting window, when fertilizer application determines crop yields for the remainder of the year. The Center for Strategic and International Studies reported that by late March, global urea futures had reached $693 per ton, up 49% from pre-conflict prices. Oxford Economics noted urea and ammonia prices had risen roughly 50% and 20%, respectively, since the war began.

The lag between fertilizer price spikes and grocery shelf prices is measured in months. Yield effects from insufficient or delayed spring application show up in harvest data in Q3 and Q4, and in food prices after that. The USDA’s pre-war forecast called for a 3.6% increase in all food prices across 2026, a figure that predates the conflict entirely.

What Economists Expect in the Months Ahead

The April CPI is scheduled for release May 12, and forecasters expect it to be worse than March. EY-Parthenon chief economist Gregory Daco projected headline CPI of 3.6% in April and May, with core temporarily rising toward 2.9% in May and June before declining to 3.0% by December. LPL Financial chief economist Jeffrey Roach said to expect one or two more hot prints driven by transportation services and durable goods as the Hormuz closure works through supply chains.

Oxford Economics’ Bernard Yaros called the duration and intensity of the Iran war “a key wildcard in the outlook for both inflation and monetary policy.” Capital Economics’ Thomas Ryan told CNBC that if the conflict resolves by end of April and the Strait gradually reopens, headline CPI could peak near 4% before declining to 3% by year-end, with a prolonged conflict raising the probability of broader pass-through into goods and services beyond energy. The Federal Reserve held rates at its March meeting and indicated one cut remained possible for 2026, though officials said they would need to stay nimble as they assessed the war’s inflationary effects.

J.P. Morgan Private Bank’s Joe Seydl noted that energy-linked prices tend to rise quickly during a shock and fall slowly afterward, and that markets will carry a lasting risk premium on oil once the conflict resolves. For Walmart suppliers and sellers, that means the cost environment captured in the March report is not the peak of this story. The April CPI drops May 12, the FMP billing cycle runs regardless of ceasefire news, and the fertilizer impact on grocery input costs has not yet shown up in any CPI release.

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