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WASHINGTON — U.S. consumer prices increased more than expected in March amid rises in the costs of gasoline and shelter, casting further doubt on whether the Federal Reserve will start cutting interest rates in June.
The consumer price index rose 0.4% last month after advancing by the same margin in February, the Labor Department's Bureau of Labor Statistics said on Wednesday.
Gasoline and shelter costs, which include rents, accounted for more than half of the increase in the CPI.
In the 12 months through March, the CPI increased 3.5% also as last year's low reading dropped out of the calculation. That followed a 3.2% rise in February.
The U.S. central bank has a 2% inflation target. The measures it tracks for monetary policy are running considerably below the CPI rate.
Economists polled by Reuters had forecast the CPI gaining 0.3% on the month and advancing 3.4% on a year-on-year basis.
Though the annual increase in consumer prices has declined from a peak of 9.1% in June 2022, the disinflationary trend has slowed in recent months.
Following last week's stronger-than-expected job growth in March as well as a drop in the unemployment rate to 3.8% from 3.9% in February, some economists have pushed back rate cut expectations to July. Others still believe the Fed will move in June. A minority see the window for rate cuts closing.
Fed Chair Jerome Powell has repeatedly said that the U.S. central bank is in no rush to start lowering borrowing costs.
Financial markets saw a roughly 56.0% probability of the Fed cutting rates at its June 11-12 policy meeting, according to CME's FedWatch Tool. The Fed has kept its policy rate in the 5.25%-5.50% range since July. It has raised the benchmark overnight interest rate by 525 basis points since March, 2022.
Excluding the volatile food and energy components, the CPI gained 0.4% last month after a similar rise in February and January. In the 12 months through March, the core CPI rose 3.8%, matching February's increase.
