Consumer prices in March increased by 3.5% compared with the same period last year | Private Equity Weekly

The consumer price index accelerated faster than expected in March, pushing up inflation and possibly leading the Federal Reserve to keep interest rates unchanged.

CPI, a broad measure of the cost of goods and services across the economy, rose 0.4% this month, taking the 12-month inflation rate to 3.5%, 0.3 percentage points higher than in February. Economists surveyed by Dow Jones had expected the economy to grow 0.3%, or 3.4% annually.

Excluding the volatile food and energy components, core CPI also rose 0.4% from the previous quarter and 3.8% from the same period last year, compared with forecasts of 0.3% and 3.7% respectively.

Housing and energy costs drove growth across all project indices.

Energy rose 1.1% after rising 2.3% in February, while housing costs, which account for about one-third of the CPI’s weight, rose 0.4% this month and were up 5.7% from a year earlier. Expectations that housing-related costs will fall this year have been central to the Fed’s argument that inflation will cool enough to allow for rate cuts.

Food prices rose 0.1% from the previous month and 2.2% from the same period last year. Elsewhere, used car prices fell 1.1% and medical services prices rose 0.6%.

The report comes amid jittery markets and Fed officials expressing caution about the near-term direction of monetary policy. Central bank policymakers have repeatedly called for patience in cutting interest rates, saying they have not seen enough evidence that inflation is steadily returning to its 2% annual target.

According to futures market pricing, the market currently expects the Federal Reserve to start cutting interest rates in June, and it is expected to cut interest rates three times this year. Later on Wednesday, the Federal Reserve will release the minutes of its March meeting to provide further insight into officials’ stance on monetary policy.

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