WASHINGTON—Inflation heated up sharply in March, with the Consumer Price Index rising 0.9% from February and 3.3% year-over-year, as a surge in energy costs pushed price pressures to their highest annual pace in two years and further clouded the outlook for Federal Reserve rate cuts.
The Bureau of Labor Statistics said the jump was driven largely by energy, which climbed 10.9% in March, including a 21.2% spike in gasoline prices that accounted for nearly three-quarters of the monthly increase in the all-items index. Shelter also rose 0.3%, while food was flat overall, as grocery prices slipped 0.2% and food away from home increased 0.2%. Core inflation, which excludes food and energy, rose a more modest 0.2% for the month.
America’s Credit Unions Chief Economist Curt Long said the report shows headline inflation hit a two-year high largely because of energy, warning there is still “significant uncertainty” around whether disrupted supply can recover quickly and whether elevated fuel costs could bleed further into core inflation. Long said Federal Reserve officials are likely to remain cautious about “looking through” the latest inflation spike, adding that “a rate cut is unlikely in the near term.”