A new report shows inflation remains in check with consumer prices increasing 0.2% in March, following a 0.1% gain in February, according to the U.S. Labor Department.

Over the past year the Consumer Price Index has increased 1.5%, well below the Federal Reserve’s target of 2%.

Excluding volatile food and energy prices, inflation gained 0.2% in March, translating into a 1.7% increase over the past year.

Food prices in March increased 0.4%, the same as in February, due to droughts in parts of the country, leading to higher prices for meal, vegetables and fruit. Fuel prices fell 1.7%, due to drops in liquid fuel prices with electricity and natural gas prices increasing.

“A relatively benign inflation report with hints of price pressure stemming from services. Last week's rise in the Producer Price Index too was led by service price increases, the most in four years,” said Lindsey Piegza, chief economist with the investment firm Sterne Agee. “Of course one month's report does not make a trend and looking at the annual chart, it is clear inflation continues its downward momentum, putting pressure on the Fed to maintain its accommodative policy stance.”

Meantime, a separate report shows builder confidence in the market for newly built, single-family homes rose one point to 47 in April from a downwardly revised March reading of 46, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“Builder confidence has been in a holding pattern the past three months,” said NAHB Chairman Kevin Kelly. “Looking ahead, as the spring home buying season gets into full swing and demand increases, builders are expecting sales prospects to improve in the months ahead.”

The HMI index gauging current sales conditions in April held steady at 51 while the component gauging traffic of prospective buyers was also unchanged at 32. The component measuring expectations for future sales rose four points to 57.

“Job growth is proceeding at a solid pace, mortgage interest rates remain historically low and home prices are affordable,” said NAHB Chief Economist David Crowe. “While these factors point to a gradual improvement in housing demand, headwinds that are holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor.”