Washington | Annual US inflation cooled to 3.1 per cent but was higher than forecast as many of the key measures had their biggest monthly reading in more than six months, leaving the Federal Reserve unlikely to cut rates at its May meeting.

Economists had forecast an annual reading of 2.9 per cent, but stronger readings in shelter, energy services and food prevented that from happening, leaving betting markets to price in a higher likelihood of the Fed keeping official interest rates on hold.