(TNS)–Consumer prices inched up in March for the first time in four months, largely driven by higher gas costs, the Labor Department said Thursday.
But underlying inflation slowed, a mixed message that made it unlikely Federal Reserve policymakers will increase a key interest rate this month.
The 0.1 percent increase in the consumer price index last month followed a 0.2 percent drop in February as inflation continued to closely track volatile oil prices.
Gas prices rose 2.2 percent last month, and broader energy prices were up 0.9 percent, the first increases since November. In February, gas prices plunged 13 percent and energy prices fell 0.6 percent.
The March increases in gas and energy costs more than offset a 0.2 percent decline in food prices.
But so-called core consumer prices, which exclude volatile food and energy, rose just 0.1 percent last month, the smallest increase since August.
For the 12 months ended March 31, consumer prices increased 0.9 percent, a slight slowdown in the annual inflation pace from the previous month.
Core prices were up 2.2 percent for the same 12-month period through March 31. That was a bit lower than the 2.3 percent pace from the previous month, which had been the best annual rate in nearly three years.
Fed officials want to see overall prices rising 2 percent a year.
Fed policymakers are watching inflation closely as they decide whether the economy is strong enough for another small increase in their benchmark short-term interest rate.
But with concerns about low inflation and uncertainty surrounding U.S. growth amid a global economic slowdown, central bank officials are not expected to change the so-called federal funds rate when they next meet on April 26-27.
The rate is between 0.25 percent and 0.5 percent. Fed officials had kept it near zero for seven years before nudging it up in December.
After the Fed’s meeting last month, policymakers indicated they would raise the rate by 0.25 percentage points just twice this year.
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