US consumer inflation slowed in March, according to US data on Wednesday, lessening the pressure on the Federal Reserve to maintain its aggressive posture to cool the economy.

The rate of inflation year-over-year fell to 5.0 per cent last month from 6.0 per cent in February, the smallest 12-month increase since May 2021, according to the Bureau of Labour Statistics.

The report showed a 0.1 per cent increase in March over the prior month on a seasonally adjusted basis, much lower than the 0.4 per cent reading in February and also below the 0.3 per cent that had been expected by analysts.

The report is the latest evidence that the Fed's streak of interest rate hikes over the last year is weighing on economic activity.

The report is the latest evidence that the Fed's streak of interest rate hikes over the last year is weighing on economic activity

While US labour market data has remained solid, recent reports on manufacturing and the services sector have shown signs of slowing.

US equity futures rallied following the data release, on the expectation that the Fed will call a halt to interest rate hikes in the foreseeable future.

Chief among the factors in the milder inflation number was a significant drop in energy prices, offset by higher costs for housing.

Food prices were flat in the quarter, with prices for meats, poultry and fish falling, while cereals, bakery products and nonalcoholic beverages climbed.