Year-on-year inflation in the US accelerated to 3.8% in March

WASHINGTON (AP) — U.S. consumer price increases remained high last month, driven by gasoline, rents and auto insurance, the government said Wednesday in a report that is likely to fuel debate at the Federal Reserve. on whether to reduce interest rates this year.

Prices except for the volatile food and energy categories rose 0.4% from February to March, the same rapid pace as the previous month. Compared to the same period last year, they were up 3.8%, unchanged from February’s annualized figure. The U.S. central bank monitors that core inflation closely because it tends to give a better idea of ​​where inflation is headed.

The March numbers, the third consecutive month in which inflation is above the Fed’s 2% target, threaten to derail plans to cut rates this year. Bank officials have recently made clear that as long as the economy is doing well, they are in no rush to cut rates, despite earlier forecasts that they would do so three times this year.

The numbers could also affect the election, as Republicans continue to try to blame President Joe Biden for high prices. Polls show that despite the strong job market, booming stock market and gradual decline in inflation, many Americans blame Biden for high prices.

Fed Chairman Jerome Powell has emphasized that the institution needs to be more confident that inflation is headed toward the 2% target. Powell’s position has put a spotlight on monthly inflation reports, which could determine if, when and by how much the bank will reduce interest rates. Lower interest rates would eventually lead to lower borrowing costs for businesses and individuals, and could also lead to a rise in the stock market.