The Consumer Price Index rose 0.4% in March, while a closely-watched measure that strips out food and energy costs rose by just as much—matching the same pace as the prior two months, the government said Tuesday.

Why it matters: The latest data, which also show a pick-up in the annual CPI figure, extends a streak of hotter inflation releases than policymakers would like — a key sign that returning inflation back to 2% might take longer than anticipated.

By the numbers: In the 12 months through March, overall inflation was 3.5%, compared to the 3.2% as of February.

• Core CPI, which strips out food and energy prices, didn't budge: it was 3.8%, holding at the lowest since 2021.

Context: Fed chair Jerome Powell has been measured in public comments about January and February inflation data that showed prices rising at a quicker pace — a contrast to the more muted data at the end of 2023.

• That's one reason why economists have been watching this inflation release much more closely: they saw it as key to whether it might force the Fed to reconsider its predictions for when and how much it might slash interest rates.
• The report drove analysts to mark down their expectations for future Fed rate cuts, sending convulsions through global bond markets. The yield on two-year Treasury securities — particularly sensitive to the expected path of policy — soared by 0.19 percentage points to 4.94% as of 8:45am ET. 

Go deeper: This chart explains why inflation felt so bad