US consumer prices increased more than expected in March as Americans paid more for gasoline and rental housing, leading financial markets to anticipate that the Federal Reserve would delay cutting interest rates until September.

The consumer price index rose 0.4 per cent last month after advancing by the same margin in February, the US Labor Department’s Bureau of Labor Statistics said. Gasoline prices rose 1.7 per cent after increasing 3.8 per cent in February. Shelter costs, which include rents, rose 0.4 per cent, matching February’s gain.

In the 12 months through March, CPI (consumer price index) increased 3.5 per cent, the most since September, also as last year’s low reading dropped out of the calculation. That followed a 3.2 per cent rise in February. The Fed has a 2 per cent inflation target. The measures it tracks for monetary policy are running considerably below the CPI rate.

The third straight month of strong consumer price readings reported by the Labor Department on Wednesday followed on the heels of news last week that job growth accelerated in March, with the unemployment rate slipping to 3.8 per cent from 3.9 per cent in February. US Fed Chair Jerome Powell has said the US central bank is in no rush to start lowering borrowing costs.

The higher cost of living looms large over the November 5 US presidential election.

“The data does not completely remove the possibility of Fed action this year, but it certainly lessens the chances the Fed is cutting the overnight rate in the next couple of months,” said Phillip Neuhart, director of market and economic research at First Citizens.