(Reuters) – Consumer prices in the United States slowed more than expected in March over a month and on an annual basis, official statistics showed on Wednesday, thanks in particular to the fall in the cost of gasoline, but rents stubbornly high prices have maintained underlying pressures, which may encourage the Federal Reserve (Fed) to raise rates again.

The Labor Department’s consumer price index (CPI) came in at 0.1% last month after rising 0.4% in February.

Consumer prices slowed to 5% year on year in March after rising 6% in February, the weakest year-on-year increase since May 2021.

The consumer price index peaked at 9.1% in June, the biggest rise since November 1981.

Inflation, all measures taken together, remains more than twice the Fed’s 2% target, however.

Gasoline prices are expected to rebound in the coming months after OPEC+ announced a further oil production cut earlier this month.

Economists polled by Reuters on average expected inflation to rise 0.2% month-on-month and rise 5.2% year-on-year.

Continued high inflation, tight labor markets and signs of easing financial market turmoil sparked by the collapse of two regional banks in March should allow the Fed to continue to prioritize in the fight against soaring prices.

Traders expect the US central bank to raise rates another 25 basis points at its May meeting.

The basic CPI index (“core”), which excludes volatile elements such as food products and energy, emerged up 0.4% over one month in March against 0.5% in February and a consensus Reuters by +0.4%.

Core inflation is fueled in particular by rental prices.

Over one year, the progression of the basic CPI index amounts to 5.6%, against 5.5% in February and a consensus of 5.6%.

(Report Lucia Mutikani; Diana Mandiá, edited by Kate Entringer)

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