WASHINGTON -- U.S. consumer prices rose 2.4 percent in March from a year earlier, the fastest annual pace in 12 months.
The Labor Department said Wednesday that on a monthly basis, the consumer price index declined 0.1 percent in March. The index's yearly gain, however, suggests that inflation pressures could be picking up.
Excluding the volatile food and energy categories, core prices increased 0.2 percent in March and 2.1 percent from a year ago. That was the largest annual increase for core prices since February 2017.
The gains partly reflect the impact of changes in mobile phone services costs, which fell sharply last March after several carriers introduced unlimited data plans. That drop has lifted year-over-year price changes, increasing the annual gains.
Still, economists said there were signs elsewhere of rising prices. Hotel prices jumped 2.3 percent in March, while rents increased 0.3 percent. Hospital services costs rose 4.9 percent.
"U.S. inflation is warming up rather than heating up," said Sal Guatieri, an economist at BMO Capital Markets.
The Federal Reserve wants inflation to generally run at 2 percent as a hedge against deflation when prices and wages fall. For most of the past six years, consumer prices have been stuck below that level, according to a separate gauge the Fed monitors.
The consumer price index has averaged just 1.6 percent in the past decade.
The Fed has lifted the short-term rates it controls six times since December 2015, with the latest increase occurring last month. The Fed's benchmark rate stands at 1.5 percent to 1.75 percent, still very low historically.
Fed policymakers have signaled they intend to raise rates twice more this year. If inflation data continue to show signs of picking up, they could raise rates three times.
"The upward trend could suffice to nudge the Fed three more times this year," Guatieri said.
Other items fell in price. The cost of clothing, used cars, and gasoline dropped in March, with prices at the pump down 4.9 percent, the most since May.
Meanwhile, the jobless rate is at the lowest level since 2000 as the labor market tightens, indicating the Fed has almost reached its other goal, of maximum employment.
Core inflation "is running a little bit hotter but we don't see it likely to rise to problematic levels," said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. "Even though demand for labor is tight, the economy overall is expanding at a fairly balanced pace where inflation is kept in check."
The report "is in line with the Fed's expectations," said Price, who correctly forecast the 2.1 percent annual gain in the core price index.
A separate report, also released Wednesday by the Labor Department, showed average hourly earnings adjusted for inflation rose 0.4 percent from March 2017. Worker pay has grown moderately in this expansion even with robust demand for labor.
The consumer price index is the broadest of three price gauges from the Labor Department because it includes all goods and services. More than half of the index covers the prices that consumers pay for services ranging from medical visits to airline fares, movie tickets and rents.
Information for this article was contributed by Shobhana Chandra of Bloomberg News.
Business on 04/12/2018