A measure of underlying US inflation topped forecasts for a third straight month, heralding a fresh wave of price pressures that will likely delay any Federal Reserve (Fed) interest-rate cuts until later in the year.

The so-called core consumer price index (CPI), which excludes food and energy costs, increased 0.4% from February, according to government data out on Wednesday. From a year ago, it advanced 3.8%, holding steady from the prior month.

Economists see the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4% from the prior month and 3.5% from a year ago, an acceleration from February that was boosted by higher energy prices, Bureau of Labor Statistics (BLS) figures showed.

Wednesday’s report adds to evidence that progress on taming inflation may be stalling, despite the Fed keeping interest rates at a two-decade high. With a strong labour market still powering household demand, officials have been adamant they would like to see more evidence that price pressures are sustainably cooling before lowering borrowing costs.

Treasury yields and the dollar jumped, while S&P 500 index futures tumbled. Swaps traders slashed the degree to which they see the Fed will cut rates this year. Minutes from the Fed’s meeting last month will be released later on Wednesday.

The core CPI over the past three months increased an annualised 4.5%, the most since May.

Gasoline and shelter accounted for over half of the overall monthly advance, the BLS said. Costs of car insurance, medical care and apparel increased in the month, while prices of new and used cars fell.

Shelter prices, which is the largest category within services, rose 0.4% for a second month. Owners’ equivalent rent - a subset of shelter, which is the biggest individual component of the CPI - climbed by that much as well.

Excluding housing and energy, services prices accelerated to 4.8% from a year ago, the most since April 2023, according to Bloomberg calculations. While central bankers have stressed the importance of looking at such a metric when assessing the nation’s inflation trajectory, they compute it based on a separate index.

That measure, known as the personal consumption expenditures (PCE) price index, doesn’t put as much weight on shelter as the CPI does. That’s part of the reason why the PCE is trending much closer to the Fed’s 2% target.

Policymakers will have access to one more PCE report, as well as another look at the producer price index, before their next policy meeting concludes on May 1. Fed officials have effectively ruled out a rate cut then.

  - Bloomberg