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Consumer prices, led by fuel, rise sharply in March

Analysts worried energy costs may be spilling over

WASHINGTON -- Consumer prices rose sharply in March, reflecting higher costs for everything from gasoline to clothes and hotel rooms. Perhaps most troubling, core inflation, which does not include energy and food, rose at the fastest pace in a year.

The Labor Department reported yesterday that its consumer price index rose by 0.4 percent, up sharply from the modest 0.1 percent gain in February.

The extra price pressures were led by a big jump in gasoline prices.

Excluding energy and food, core inflation rose by 0.3 percent in March, the biggest gain since a similar increase in March 2005.

This acceleration reflected higher prices paid by renters, the biggest jump in clothing costs in seven years and a large increase in airline ticket prices.

Analysts said the increase in core inflation was worrisome because it was so widespread and could show rising energy costs are beginning to spill over into other areas.

''Any way you cut it, inflation was not well contained in March," said Joel Naroff, chief economist for Naroff Economic Advisors. ''This was not a good report, especially if you are a member" of the Federal Reserve committee that sets interest rates.

Economists said the Fed has emphasized that future rate actions would depend greatly on economic data.

Yesterday's inflation report, economists said, showed that rising prices could mean the Fed will lift interest rates after its May 10 meeting.

Others said it would take more than one bad inflation report to push the central bank to raise rates again after May 10.

''While the rise in core prices is a bit uncomfortably high, this stand-alone report is not evidence that soaring energy prices are feeding into other prices," said Sherry Cooper, chief economist at BMO Nesbitt Burns.

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