US Consumer Prices Rose Faster than Expected in March

Consumer prices in the US rose faster than expected last month, in a sign that the fight to slow inflation has stalled.

The US Labor Department said prices rose 3.5 per cent over the 12 months to March, up from 3.2 per cent in February.

Higher costs for fuel, housing, dining out and clothing drove the increase.

Analysts warned that the lack of progress in curbing price rises will force the US central bank to keep interest rates higher for longer.

Higher rates help stabilise prices by making it more expensive to borrow for business expansions and other spending. In theory, that in turn slows the economy, and eases the pressures pushing up prices.

The Federal Reserve’s key interest rate is now at the highest level in more than two decades, in the range of 5.25 per cent to 5.5 per cent.

Forecasters had expected the bank to start lowering borrowing costs this year, reflecting the fact that the inflation rate, which tracks the pace of price rises, has fallen significantly since hitting 9.1 per cent in 2022.