American consumer prices climbed in March amid rising gasoline and housing costs, raising further doubts about whether the Federal Reserve would start cutting interest rates in June, according to Reuters.
The consumer price index (CPI) rose 0.4% last month after growing by the same amount in February, the Labour Department’s Bureau of Labor Statistics (BLS) reported on Wednesday. Spending on gasoline and housing, including rent, accounted for more than half of the CPI increase.
In the 12 months to March, the consumer price index rose by 3.5%. The US Central Bank set an inflation target of 2%, but the measures it was monitoring for monetary policy were well below the CPI.
Economists had predicted that the index would rise 0.3% for the month and increase 3.4% on an year-on-year basis. Although annual consumer price growth has fallen from a peak of 9.1% in June 2022, the disinflationary trend has slowed in recent months.
With stronger-than-expected job growth last week in March and the unemployment rate falling to 3.8% from 3.9% in February, some economists have postponed expectations of a rate cut until July. Others still believe the central bank will take action in June. A minority see the window for rate cuts closing.
Chairman of the Federal Reserve of the United States, Jerome Powell, has repeatedly stated that the US Central Bank is in no hurry to lower borrowing costs. According to CME’s FedWatch Tool, the probability of a Fed rate cut in the financial markets at the June 11-12 meeting stands at about 56%.
Excluding the volatile food and energy sectors, the CPI rose by 0.4% last month following similar increases in February and January. Over the 12 months to March, the core CPI rose 3.8%, matching February’s increase.
