Surprisingly strong price rise

Consumer Price Index, core both top forecasts; ex-food and energy up most since 2002.

April 20, 2005: 8:43 AM EDT

NEW YORK (CNN/Money) - Prices paid by consumers rose faster in March, the government reported Wednesday, coming in above Wall Street expectations.

The Consumer Price Index, the government's main measure of inflation, increased 0.6 percent in March, compared to a 0.4 percent rise in February. Economists surveyed by Briefing.com had forecast a 0.5 percent increase.

Of greater concern to the markets, the so-called "core CPI," which strips out often volatile food and energy prices, rose 0.4 percent, compared with February's 0.3 gain. It was the largest month-to-month percentage change in that closely watched reading since August 2002.

Briefing.com's consensus forecast was for only a 0.2 percent rise.

Treasury prices fell sharply, causing yields on the 10-year note to soar to 4.29 percent from 4.22 percent before the report, as traders saw a far greater chance of the Federal Reserve getting more aggressive in its rate hikes in order to slow the economy and battle inflation.

Futures for the Standard & Poor's 500 fell following the report, although they still pointed to a higher open for stocks following some strong earnings reports.

(velas de 5 minutos)