Gasoline prices drive up U.S. inflation

CBCNEWS
The closely watched U.S. consumer price index rose by 0.6 per cent in March, up from 0.4 per cent in February and the sharpest jump in nearly a year.

The U.S. Labour Department said prices were pushed up by gasoline, which rose 11 per cent last month. The 5.9 per cent increase in energy costs was the biggest one-month increase since September 2005, when Hurricane Katrina shut down Gulf Coast refineries.

Food price increases moderated following two big months of gains spurred by crop damage.

Excluding such volatile components as food and energy prices, the index rose 0.1 per cent in March, the smallest rise in the so-called core rate of inflation in three months.

Analysts had been expecting the core rate to rise by 0.2 per cent. Market watchers say the cooler core rate gives the U.S. Federal Reserve more reason to hold steady with interest rates.

"Looking forward, there is reason to think that the inflation trend could continue downward," said TD Securities strategist Eric Lascelles in a commentary.

"As inflation risks continue to diminish in the future, we think the odds of eventual rate cuts substantially outweigh the odds of additional hikes in the U.S."