Consumer prices rose 3.5% from a year ago in March

The consumer price index accelerated at a faster pace than expected in March, pushing inflation higher and likely keeping the Federal Reserve on hold on interest rates.

The CPI, a general measure of the costs of goods and services across the economy, rose 0.4% on the month, putting the 12-month inflation rate at 3.5%, or 0 .3 percentage points more than in February. Economists surveyed by Dow Jones expected a gain of 0.3% and a year-over-year level of 3.4%.

Excluding volatile food and energy components, the core CPI also accelerated by 0.4% on a monthly basis while increasing by 3.8% year-on-year, compared to respective estimates of 0.3 % and 3.7%.

Housing and energy costs were behind the increase in the all-items index.

Energy rose 1.1% after rising 2.3% in February, while housing costs, which account for about a third of the CPI’s weighting, rose 0.4% over the month and 5.7% compared to a year ago. Expectations of a deceleration in housing costs throughout the year have been central to the Fed’s thesis that inflation would cool enough to allow for interest rate cuts.

Food prices increased by only 0.1% over the month and 2.2% over the year. Elsewhere, prices for used vehicles fell 1.1% and prices for medical care services rose 0.6%.

The report comes as markets are nervous and Fed officials express caution about the near-term direction of monetary policy. Central bank policymakers have repeatedly called for patience on rate cuts, saying they have not seen enough evidence that inflation is on track to return toward its 2% annual target.

Markets currently expect the Fed to begin cutting interest rates in June, with three cuts in total expected this year, according to futures market prices. Later Wednesday, the Fed will release minutes of its March meeting, providing more information on where officials stand on monetary policy.

This is breaking news. Please check back here for updates.