U.S. consumer price gains slow; underlying inflation still hot

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Key Points

U.S. consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering, likely ensuring that the Federal Reserve will raise interest rates again next month...

Rents have been one of the main drivers of inflation in the past years..

"The Fed will take some comfort from calmer headline inflation, especially given that declining energy costs and now flat food prices will help to reduce inflation expectations," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto...

Persistently high inflation, labor market tightness and signs that financial market stress, wrought by last month's collapse of two regional banks, is easing should allow the Fed to continue prioritizing restoring price stability...

The Fed last month raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of pausing further rate increases in a nod to the financial market turmoil..

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