The consumer price index rose slightly faster than analysts had been expecting for March. According to MarketWatch, core prices—which exclude energy and food prices—rose .2%, compared to the economists they surveyed, who expected, on average, a .1% increase.

inflation

Inflation pressure building

According to analysts, overall inflation is still weak, although they see signs that pressure may be building. Those MarketWatch spoke with note that prices have been edging upward on a three- and six-month basis. However, growth in wages remains modest, and retail competition remains strong, so BMO Capital Markets senior economist Jennifer Lee believes inflation will “remain in check for now.”

Prices increased by 1.5% for the 12 months which ended in March. That’s an increase from the 1.1% rate in February. Core prices edged upward by 1.7% in March, an increase from 1.6% in February.

Inflation heading toward Fed target

Capital Economics senior economist Paul Dales told MarketWatch that longer trends will likely increase inflation, pushing it close and closer to the Federal Reserve’s target of 2% annually. One way to measure inflation is using the personal consumption expenditure index. When adjusting for that, the target is closer to 2.5%.

The Fed has been keeping an eye on inflation and unemployment in order to determine when to boost short-term interest rates. One of the main reasons the central bank hasn’t increased those interest rates is because of inflation. Officials have been gradually tapering off their bond-buying program and could complete the taper during the fourth quarter of this year. However, they are not expected to raise interest rates until sometime toward the middle of 2015.

Housing prices on the price

Another big component in March’s increase in the core consumer price index was a .3% rise in housing costs. They rose 2.7% on an annual basis, which is the fastest rate in six years. Food prices also rose, edging upward by .4% as a number of major grocery store chains raised prices significantly.

Energy prices fell during the month, declining .1% due to lower fuel and gasoline prices, which more than offset the rising prices of natural gas and electricity. Medical care, airline fares and used car indexes also rose in March, and prices of clothing increased for the first time so far year to date. Prices for recreation and furniture fell in March, while hourly wages declined .3% in March. Real wages have risen by .5% over the last 12 months, however.