US consumer prices increased for a second straight month in March on rising gasoline and housing costs, a sign of inflation that should keep the Federal Reserve on course to start raising interest rates this year.

March’s broad-based price gains bolster the US central bank’s long-held view that inflation will gradually move towards its two per cent target as the dampening effect of lower energy prices fades.

“The data should allay the disinflation concerns that predominated earlier this year and, on the margin, increase the Fed’s confidence that inflation will eventually move toward its target,” said Michelle Girard, chief economist at RBS in Stamford, Connecticut.

The Labour Department said yesterday its Consumer Price Index increased 0.2 per cent last month after a similar gain in February. In the 12 months through March, the CPI slipped 0.1 per cent after being unchanged in February.

The so-called core CPI, which strips out food and energy costs, increased 0.2 percent in March after a similar rise in February. In the 12 months through March, the core CPI rose 1.8 per cent, the largest increase since October.

The Fed has kept overnight interest rates near zero since December 2008, but a number of officials have said a rate hike will likely be considered at the June policy-setting meeting.

But a recent raft of weak economic data, including the March non-farm payrolls report, has left many economists believing that monetary policy tightening will not happen before September.

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