Inflation came in hot at 3.5% in March, CPI report shows. Fed could delay rate cuts.

Inflation ran hot for a third straight month in March, raising questions about when the Federal Reserve will feel confident that price pressures are subdued and it can begin cutting interest rates.

Overall prices increased 3.5% from a year earlier, up from 3.2% in February, driven largely by the rising cost of rent and gasoline, according to the Labor Department’s consumer price index (CPI). On a monthly basis, costs rose 0.4%, similar to the previous month.

Core prices, which exclude volatile food and energy items and are watched more closely by the Fed, increased 0.4% in line with February's rise. That kept the annual increase at 3.8%.