Consumer Prices Up, Unease Over Inflation WASHINGTON (Reuters) - Surging energy costs helped push up U.S. consumer prices in March, and with food and energy stripped out inflation rose at the sharpest rate in 2-1/2 years, drawing a warning from the Federal Reserve on Wednesday that it was closely watching price pressures. The Consumer Price Index, widely used as a major gauge of inflation, was up 0.6 percent last month -- the sharpest monthly gain since October -- following a 0.4 percent rise in February, the government said on Wednesday. But surprisingly and on a more worrying note, the so-called core rate that strips out volatile food and energy costs accelerated to a 0.4 percent increase in March from 0.3 percent in February. That was the biggest monthly increase in core inflation since a matching 0.4 percent jump in August 2002, and reflected a broad-based pickup in many categories of goods. "You can't make a decision on an individual number, but just based on this one number, this would make the Fed more emboldened perhaps to continue tightening," said economist Robert Macintosh of Eaton Vance Management in Boston. Fed policymakers cited their concern about mounting price pressures on March 22 when they raised the trendsetting federal funds rate for a seventh time since last June by a quarter percentage point to 2.75 percent. U.S. bond prices weakened on Wednesday as investors feared the inflation data might induce the U.S. Federal Reserve to boost interest rates more rapidly. The dollar's value rose immediately after the report because higher interest would make the U.S. currency more attractive to foreigners. Stocks seesawed, rising initially on favorable earnings reports from some key companies including Intel Corp. (INTC.O: Quote , Profile , Research ) but turning down as inflation worries grew. FED IS WATCHING The vice-chairman of the Federal Reserve, Roger Ferguson, told reporters in Chapel Hill, N.C., where he spoke to University of North Carolina students that the Fed was wary about emerging price pressures. "I think it's very important for us to continue to track pricing developments very closely," Ferguson said, though he noted some price rises in the March CPI came in areas like lodging and apparel that can be volatile. The Fed's periodic "Beige Book" on national economic conditions added to the sense of wariness about prices as the summary of anecdotal information pointed to growing unease over energy costs.     Continued ... Quelle "Consumer Prices Up, Unease Over Inflation" : reuters.com Main page for "Consumer Prices Up, Unease Over Inflation"