WASHINGTON, D.C., U.S.: A sharp rise in fuel costs pushed U.S. inflation higher in March, complicating the Federal Reserve's path on interest rates and raising fresh concerns about pressure on household spending.

The Consumer Price Index jumped 0.9 percent last month, the Labor Department's Bureau of Labor Statistics said on April 10, the largest increase since June 2022, when prices soared in response to the Russia-Ukraine war.

Consumer prices rose 0.3 percent in February. In the 12 months through March, the CPI advanced 3.3 percent, up from 2.4 percent in February. Economists polled by Reuters had forecast the CPI accelerating by 0.9 percent and rising 3.3 percent on a year-over-year basis. The jump in consumer inflation followed a sharp rebound in job growth last month, suggesting the labor market remained stable.

There are, however, concerns that a prolonged conflict in the Middle East could undermine the labor market, especially if households respond to high prices by pulling back on spending. The U.S.-Israeli war with Iran has sent global crude oil prices surging more than 30 percent, with the national average retail gasoline price breaking above US$4 a gallon for the first time in more than three years.

Though President Donald Trump on Tuesday announced a two-week ceasefire on the condition that Tehran reopen the Strait of Hormuz, the truce appeared fragile. Last month's increase showed only the immediate effects of the oil price shock, which has also raised diesel prices. March's surge underscored the affordability challenges facing consumers.

Trump won the 2024 presidential election on a promise to lower prices.

Excluding the volatile food and energy components, the CPI rose 0.2 percent last month after climbing 0.2 percent in February. That translated to a year-on-year increase of 2.6 percent in the so-called core CPI.

The moderate rise after a 2.5 percent advance in February likely offers no comfort for officials at the U.S. central bank, with an acceleration expected in April as the secondary effects of the oil price shock filter through.

Both core CPI and PCE inflation have been driven by businesses passing on some of Trump's broad tariffs to consumers, offsetting the disinflationary trend in rents. In the months ahead, economists expect the Middle East conflict to lift core prices through expensive jet fuel, which will raise airline fares, and diesel, which will increase the cost of goods transported by road.

Prices of fertilizer and plastics, among other goods, are also expected to rise. Firming inflation has left some economists believing the Fed would not reduce borrowing costs this year, a conviction reinforced by the release on Wednesday of minutes from the central bank's March 17-18 policy meeting, which showed that a growing group of policymakers last month felt that rate hikes might be needed.

The Fed left its benchmark overnight interest rate in the 3.50 percent to 3.75 percent range. Some economists still see a chance of a rate cut if labor market conditions deteriorate.

Others argued that consumers pulling back as gasoline prices eroded their purchasing power could make it difficult for some businesses to pass on higher oil costs.