Data released Tuesday show US inflation unexpectedly increased to 3.2 per cent last month, presenting more challenges to the Federal Reserve.

Economists polled by Bloomberg had expected annual consumer price inflation to remain unchanged from January’s rate of 3.1 per cent.

But Tuesday’s rise, largely stoked by services such as motor insurance and health, triggered warnings that the Fed may have to wait longer than previously expected before cutting interest rates from their current 23-year high, according to a Financial Times report.

Tuesday’s figures will play an important part in the Fed’s thinking when it publishes new projections next week on how many cuts it expects for 2024. The March 20 meeting is also expected to keep rates at between 5.25 and 5.5 per cent, the Financial Times report said.

Ahead of the report, many economists had believed a surge in consumer prices in January that caught forecasters off guard was more of a statistical fluke and less an indication that inflation was flaring up again, and that it would resume its recent downward trend in coming months. But that uptick is proving more stubborn than expected.