(CN) — Consumer prices rose 2.4 percent in March from a year earlier, the fastest annual pace in 12 months, the Labor Department said Thursday.
The government’s consumer price index is an assessment of the variation in prices paid by consumers for retail goods and other items.
On a monthly basis, the index actually declined 0.1 percent in March, but the year-over-year figure is more noteworthy, as it suggests inflation pressures may be growing stronger.
Excluding the volatile food and energy categories, core prices ticked up 0.2 percent in March and 2.1 percent from a year ago.
That was the biggest 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, boosting the annual gains.
The cost of clothing, used cars, and gasoline dropped in March, with prices at the pump down 4.9 percent, the most since last May.
On the other hand, hotel prices jumped 2.3 percent in March, while rents increased 0.3 percent. Hospital services costs rose 4.9 percent.
Speaking with the Associated Press, Sal Guatieri, an economist at BMO Capital Markets, said the report suggests “inflation is warming up rather than heating up.”
And that could be enough to push the Federal Reserve to increase interest rates one, or as many as three times, before the end of the year.
The Federal Reserve wants inflation to generally run at about 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.
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.