US consumer prices rose in March for the third straight month, driven by soaring energy costs, the government said today in a report that may encourage the inflation-wary Federal Reserve to increase interest rates later this year.
The Consumer Price Index (CPI), the most widely used inflation gauge, gained 0.3 per cent last month after rising 0.2 per cent in both January and February, the labour department said.
March's increase was below economists' predictions of a 0.5 per cent rise and will likely lead the Fed to wait until at least its June meeting - if not longer - to raise rates rather than moving at its next policymaking meeting in May.
Excluding volatile food and energy prices, the so-called core CPI edged up just 0.1 per cent, coming in below the 0.2 per cent increase economists had forecast.
Eenergy prices rose 3.8 per cent, the biggest increase since a 3.9 per cent rise in May last year. Food prices, another key component in the index, rose a slight 0.2 per cent last month after gaining the same amount in February.
Last month the Fed signaled rate increases are on the horizon when it dropped a 15-month-old warning that weakness posed the biggest threat to the economy. The Fed instead said risks were now more evenly balanced between inflation and weakness, a first step toward unwinding some of the rate cuts.