Housing costs were up 0.4 percent in March after gaining 0.2 percent in February. But food and beverage prices rose by a smaller 0.2 percent last month after a 0.4 percent February pickup.
The department said that in the first quarter this year, overall consumer prices rose at a seasonally adjusted annual rate of 3.1 percent, down from the 4.1 percent rise posted for all of 2007. Core prices in the first quarter gained at a 2 percent rate, under the 2.4 percent rise for all of 2007.
Housing Starts Fell
Meanwhile, the Commerce Department said housing starts set an annual pace of 947,000 units in March, lower than the 1.02 million expected by economists. The February starts figure was revised upwards to 1.075 million from the 1.065 million originally reported.
U.S. stock futures moved higher while the dollar fell and Treasuries pared losses as the weak data boosted expectations of further rate cuts from the Federal Reserve to bolster the economy.
"It's a dismal report...It challenges the proposition that construction has scraped bottom," said Richard DeKaser, chief economist at National City in Cleveland.
Building permits fell by 5.8 percent to an annual rate of 927,000, the slowest pace since a 916,000 rate set in April 1991. Economists polled by Reuters had forecast March permits at 970,000 after the 984,000 rate of February.
The home starts pace was the lowest since a 921,000 rate set in March 1991.