Consumer prices rose 3.5% from a year ago in March, more than expected

Inflation accelerated at a faster pace than expected in March, rising to 3.5%, the highest level since October 2019.

This increase was driven by surging energy and shelter costs.

Energy prices jumped 1.1% in March, following a 2.3% increase in February, while shelter costs rose 0.4% on the month and 5.7% over the past year.

This inflation surge dashed hopes that the Federal Reserve would cut interest rates anytime soon.

Following the report, traders pushed the expected date of the first rate cut to September.

The Fed has repeatedly emphasized patience in cutting rates, as they need further evidence that inflation is on track to reach their target of 2%.

Excluding volatile food and energy prices, the core CPI also saw a 0.4% monthly increase and a 3.8% annual rise, indicating persistent inflation.

While food prices increased modestly overall, there were significant gains in certain categories, such as a 4.6% jump in egg prices.

The rise in inflation has negative implications for workers, as real average hourly earnings remained flat for the month and rose only 0.6% over the past year.

This means that workers’ wages are not keeping up with rising living expenses.

The Fed will release minutes from its March meeting later on Wednesday, which may shed light on officials’ current stance on monetary policy.

Recent statements from Fed officials suggest that multiple rate cuts this year are unlikely.

Atlanta Fed President Bostic predicts just one cut this year, possibly in the fourth quarter.