USA wholesale prices increased 0.3 percent in March, driven higher by the largest increase in food costs in almost four years.
Inflation slowed in March for the third consecutive month, according to the National Institute of Statistics and Geography (Inegi).
The government's gauge of consumer prices fell in March, pulled lower by an unexpected decline in gasoline prices.
That put the core CPI above the Fed's 2% target for its preferred inflation measure, the personal consumption expenditure price index, which was up 1.8% in February.
That was in line with the flash data published on March 29. Prices for fish, fish products, butter, bread, pasta, cheese, rice, meat and meat products grew by 1.6%-0.8%.
Consumer price inflation (CPI) fell 1.1% over the month, far larger than the 0.5% decline expected, leaving the increase on a year earlier at 2.1%.
"Fed hawks [will] point out to their colleagues that the core CPI rose at a 3% annualized rate in the first quarter, the fastest increase in 12 years", he told MarketWatch.
The U.S. central bank increased borrowing costs last month and forecast at least two additional rate hikes in 2018.
Capital Economics said in a note that "the data support our view. that the central bank will leave interest rates unchanged at Thursday's policy meeting". Prices of cereals and bakery products rose 0.4 percent.
The price of clothing and footwear was up by 1.6% due to the traditional change to the spring collection, while the price of consumer durables dropped 0.2%, showing that the mild global inflationary environment continues to have a cooling effect in Hungary.
The cost of other major household expenses such as rent and medical care rose more sharply, however, as did prices for plane flights and auto insurance. Healthcare costs rose 2.0 percent year-on-year, below the 2.9 percent average annual rate over the past 10 years.
Producer price inflation (PPI), also known as factory gate inflation, also moderated, dropping by 0.2% from February. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 per cent last month after climbing 0.2 per cent in February.
There were also declines in the cost of telecommunication, used cares and trucks, tobacco and education.