Consumers likely paid more for gasoline and food last month, pushing up overall consumer prices and limiting the ability of shoppers to spend on other goods.
Economists forecast that the Consumer Price Index rose 0.5 percent in March. That would match February's increase, which was the largest since the recession ended in June 2009. Excluding volatile food and energy, the core prices are forecast to rise 0.2 percent for the third straight month. Economists monitor core prices to get a sense of broader inflation trends.
Gas prices rose to $3.63 a gallon in March, according to Moody's Analytics, and prices have continued to rise since then. Consumers paid an average price of $3.81 a gallon nationwide on Thursday, according to the travel group AAA.
Many agricultural commodities, such as corn, wheat and cotton have also risen sharply this year, putting pressure on food producers and retailers to pass the higher costs onto grocery store shelves. Wholesale food prices dipped last month, but economists expect that previous price rises at the wholesale level will translate into higher consumer food costs in March.
Higher food and gas prices mean consumers have less money to spend elsewhere, which could slow the economy. Many analysts have reduced their estimates for economic growth in the January-March quarter from roughly 3 percent or higher to as low as 1.5 percent, mostly because of more expensive gas.
Inflation is still modest but increasing rapidly. The Consumer Price Index is forecast to rise 2.7 percent in March compared to 12 months earlier. That would be up from 2.1 percent in February and only 1.6 percent in January.
The core index, meanwhile, is projected to be 1.2 percent higher in March than 12 months earlier. That's below the Fed's preferred range of less than 2 percent.
Most Fed policymakers say the spike in oil will have only a modest and temporary impact on inflation. Six months ago, they were more concerned about falling prices when the core index rose only 0.6 percent in a 12-month period. The October reading was the smallest increase since the index began in 1957.