WASHINGTON (Reuters) - U.S. consumer prices increased by the most in 14 months in March, but the underlying inflation trend remained benign amid slowing domestic and global economic growth.

FILE PHOTO: A shopper views various types of cereal at a Ralphs grocery store in Pasadena, California August 3, 2015. REUTERS/Mario Anzuoni/File Photo

The mixed report from the Labor Department on Wednesday was broadly supportive of the Federal Reserve’s decision last month to suspended its three-year campaign to raise interest rates. The U.S. central bank dropped projections for any rate hikes this year after lifting borrowing costs four times in 2018.

Minutes of the Fed’s March 19-20 meeting, published on Wednesday, showed most policymakers viewed price pressures as “muted,” but expected inflation to rise to or near the central bank’s 2 percent target. The Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy is currently at 1.8 percent.

“For the most part, inflation remains tame,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “The Fed effectively went on vacation and is likely to stay there for quite a few more months.”

The Labor Department said its Consumer Price Index rose 0.4 percent, boosted by increases in the costs of food, gasoline and rents. That was the biggest advance since January 2018 and followed a 0.2 percent gain in February.

In the 12 months through March, the CPI increased 1.9 percent. The CPI gained 1.5 percent in February, which was the smallest rise since September 2016. Economists polled by Reuters had forecast the CPI climbing 0.3 percent in March and accelerating 1.8 percent year-on-year.

Stripping out the volatile food and energy components, the CPI nudged up 0.1 percent, matching February’s gain. The so-called core CPI was held down by a 1.9 percent plunge in apparel prices, the largest drop since January 1949.

The government last month introduced a new method and data to calculate apparel prices. Apparel prices, which had increased for two straight months, trimmed the core CPI by 0.07 percentage point in March. Many economists expected a reversal in April.

“The new price collection methodology for apparel incorporates corporate data from one unidentified department store to complement prior survey-based collection,” said Kathy Bostjancic, head of U.S. Macro Investor Services at Oxford Economics in New York. “The new methodology appears more likely to show large monthly declines due to the lifecycle of apparel.”

LOW INFLATION EXPECTATIONS

In the 12 months through March, the core CPI increased 2.0 percent, the smallest advance since February 2018. The core CPI rose 2.1 percent year-on-year in February.

The dollar was trading slightly lower against a basket of currencies, while U.S. Treasury prices rose. Stocks on Wall Street were mostly higher.

Inflation has remained muted, with wage growth increasing moderately despite tightening labor market conditions. Minutes of the March policy meeting showed some Fed officials believed the benign price pressures could be the result of low inflation expectations and also an indication the labor market was likely not as tight as implied by measures of resource utilization.

“The minutes reinforce our view that rates are on hold for the foreseeable future, though this could shift if the economy and or inflation surprise to the up or down sides,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

A 3.5 percent jump in energy prices in March accounted for about 60 percent of the increase in the CPI last month. Gasoline prices surged 6.5 percent, the biggest gain since September 2017, after rising 1.5 percent in February.

Food prices gained 0.3 percent after accelerating 0.4 percent in February. Food consumed at home increased 0.4 percent. Consumers also paid more for rent. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 percent in March after a similar gain in February.

Healthcare costs rebounded 0.3 percent after slipping 0.2 percent in February. There were increases in the costs of prescription medication and hospital services.

The cost of new vehicles rebounded 0.4 percent after declining 0.2 percent in February. But there were decreases in the prices of used motor vehicles and trucks, airline fares and motor vehicle insurance.