Consumer inflation also eased sharply in the previous month as the effects of booming demand spurred by the Lunar New Year holiday in February receded, official data showed on Wednesday. The highest price increases in the third month of the year were measured for alcoholic beverages and tobacco as well as food, the stats office remarked.
"Although core CPI is back above 2%, the slight monthly uptick in price pressures should still leave core PCE tracking a little below 2% and therefore does not change our view of the Fed hiking two more times over the remainder of the year", she said.
But with the labour market tightening, the dollar weakening and the stimulus from a $1.5 trillion income tax cut package and increased government spending still to impact on the economy, economists expect inflation will breach its target some time this year.
Inflation based on the Harmonized Index of Consumer prices increased 0.8 percent yearly in March, just above the 0.7 percent rise in February.
Prices of food increased the most in monthly terms, by 0.9%.
The IMF said in a report earlier that it expected inflation to fall to 12 percent by June and to single digits by 2019. Core consumer prices, which strip out volatile items like fresh food and energy, rose by 2 per cent Y/Y versus 2.5 per cent in February. Profits at industrial firms picked up pace in the first two months of the year from December but still lagged growth for the whole of 2017.
The prices of housing, water, electricity, gas and other fuels, which have the second-largest weight of 13.6%, edged down 0.97% year-on-year in March after rising by 0.98% in February.
Economists had forecast the CPI unchanged in March and the core CPI rising 0.2 percent. That measure-the price index for personal consumption expenditures-shows inflation continues to run below the Fed's target but is not far off. Stocks on Wall Street fell as investors anxious about rising tensions between the United States and Russian Federation over a possible US military action against Syria.
The drop owed entirely to a temporary decline in gasoline prices.
Average hourly earnings posted the biggest gain since July 2016, rising 0.4 per cent in March, following the 0.1 per cent decline in February, according to a separate report.
That's not to say everything was cheaper last month.
Healthcare costs increased 0.4 percent, with prices for hospital care shooting up 0.6 percent and the cost of doctor visits rising 0.2 percent.