U.S. consumer prices increased in February
The consumer price index increased 0.4% last month after rising 0.3% in January. A 6.4% advance in gasoline prices accounted for more than half of the gain in the CPI.
In the 12 months through February, the CPI shot up 1.7%, the largest rise since February 2020, after climbing 1.4% in the 12 months through January. Last month’s CPI readings were in line with economists’ expectations.
Gasoline prices surged 7.4% gain in January. Food prices climbed 0.2% last month, with the cost of food consumed at home gaining 0.3%. The cost of food consumed away from home rose 0.1%.
Excluding the volatile food and energy components, the CPI nudged up 0.1% after being unchanged for two straight months. The so-called core CPI was lifted by a surprise pick-up in rents as well as rising costs for recreation, medical care and motor vehicle insurance, which offset declines in prices for airline fares, hotel and motel rooms, used cars and trucks and apparel.
The core CPI rose 1.3% on a year-on-year basis, retreating from January’s 1.4% gain. The Fed tracks the core personal consumption expenditures (PCE) price index for its inflation target. The U.S. central bank has signaled it would tolerate higher prices after inflation persistently undershot its target. The core PCE price index is at 1.5%.
The mixed report from the Labor Department on Wednesday did not change expectations that inflation will push higher and exceed the Federal Reserve’s 2% target, a flexible average, by April as declining COVID-19 infections and a faster pace of vaccinations allows the economy to reopen. ■