US consumer confidence unexpectedly rises in March, survey finds

Increase puts pressure on the Fed as it struggles to reduce inflation

The Fed has been increasing interest rates since last year in a bid to tackle rising prices. Bloomberg

US consumer confidence rose unexpectedly in March, but remains below last year's average, according to survey data released on Tuesday.

The climb adds to pressure on the Federal Reserve as it looks to control rising prices.

The closely watched consumer confidence index increased in March to 104.2 from 103.4 last month, research group The Conference Board said. The release was higher than the median expectation of analysts in a Briefing.com survey.

“The gain reflects an improved outlook for consumers under 55 years of age and for households earning $50,000 and over,” said Ataman Ozyildirim, senior director for economics at The Conference Board.

But he warned that, “while consumers feel a bit more confident about what's ahead, they are slightly less optimistic about the current landscape.”

Consumers intend to spend less on highly discretionary categories such as visiting amusement parks and dining, he said.

But he added that they expect to spend more on necessary items like health care and home maintenance.

The US Federal Reserve has been sharply raising interest rates since last year in a bid to tackle rising prices, which remain well above its long-run target of two per cent.

Earlier this month, the Fed raised its benchmark lending rate by 25 basis points and signalled it is expecting just one more rate increase this year.

The current economic conditions could make it more challenging for the Fed to bring price rises under control.