U.S. consumer prices climbed 0.4 percent in March, an increase caused mostly by higher costs for gasoline, electricity, and shelter.

The Labor Department said Wednesday that the consumer price index rose a healthy 1.9 percent last month from a year ago, a sharp jump from the annual pace of 1.5 percent in February.

Inflation has been relatively modest even as the job market has strengthened and wage gains have accelerated over the past several years. The Trump administration has been highlighting the meager inflation as the president calls on the Federal Reserve to cut a key short-term interest rate.

But inflation in the form of commodity prices for gasoline and electricity did return in March, eating into wage growth. Average hourly wages have increased 1.3 percent in the past year, down from an annual gain of 1.9 percent in February.

Roughly 60 percent of inflation last month came from a 3.5 percent increase in energy prices.

Excluding the volatile energy and food categories, core prices increased 0.1 percent in March and 2 percent from a year ago.

Housing costs are also increasing faster than overall inflation, surging 3.4 percent from a year ago. But prices for clothing and medical care commodities has fallen over the past year, while inflation has been slight for new vehicles and used cars and trucks.

Inflation has become a politically sensitive issue in recent weeks as President Trump has announced plans to nominate Stephen Moore and Herman Cain to serve on the Fed's board of governors. The Fed's mandate is to keep inflation near a 2 percent target, meaning prices increase just enough to encourage spending but not enough to destabilize prices.

Trump has favored a stiff cut to a key short-term rate by the Fed, in hopes that it boosts economic growth. Both Moore and Cain are perceived by economists and aides as likely adhering to Trump's wishes should they join the Fed, even though the central bank is supposed to set rates free from political influence.

The Trump administration's key argument that the Fed has erred is the low level of inflation. The central bank increased its key short-term rate—which sets the interest that banks charge each other—four times last year. White House officials argue that there is effectively no inflation because of the rate increases, so rates should be reduced instead.

"There's no inflation out there, so I think the Fed's actions were probably overdone," Larry Kudlow, the top White House economic adviser, told CNBC at the end of March.

By: DocMemory
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