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Inflation Rises in US Economy, Home Building Falls


A key gauge of inflation in the U.S. economy rose slightly in March, as soaring energy prices overwhelmed declines in some other areas.

Wednesday's report from the Labor Department says prices rose three-tenths of a percent. Inflation rose four percent over the 12 month period that ended in March.

Outside the volatile areas of food and energy, inflation rose 2.4 percent over the past year.

Some economists say worries about inflation will be trumped by growing concerns about the slumping U.S. economy when officials at the U.S. central bank consider interest rates at the end of this month.

The Federal Reserve is expected to continue cutting interest rates in an effort to boost economic growth and employment. The Fed would take the opposite action, raising interest rates, if it was trying to fight inflation.

A separate government report today shows the troubled U.S. housing sector got worse in March.

The number of new homes under construction dropped nearly 12 percent, while applications for permits for future projects dropped almost six percent.

Some information for this report was provided by AFP, AP and Reuters.

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