USA consumer prices fell in February due largely to a continued drop in energy prices, but other evidence pointed to steadily building inflation pressures as the labor market and economy gain steam. But with gasoline prices edging higher as oil prices rebound from long-term lows, energy costs likely will not be a drag on consumer prices, at least overall.
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In the 12 months through February, the so-called core CPI rose 2.3%, the largest gain since May 2012, after increasing 2.2% in January.
Consumer prices fell in February owing to another drop in gasoline, but the rising cost of shelter and medical care is creating upward pressure on underlying inflation.
The Labor Department said its consumer price index dipped by 0.2 percent in February after coming in unchanged in January.
Benchmark 10-year Treasury notes was last down 7/32 in price for a yield of 1.984 percent, up over 2 basis points from late on Tuesday. A 0.4 percent decline in the index for final demand trade services and a 0.7 percent decline in prices for final demand transportation and warehousing, were offset by a 0.3 percent rise in prices for final demand services, less trade, transportation and warehousing. That caused some inflation measures to drift higher. There were also increases in apparel prices, which rose 1.6 percent, the largest gain since February 2009. Central bankers are looking for inflation to move back toward their 2 per cent target once the effects of lower energy prices and a stronger dollar fade. But it left rates unchanged in January.
Last month, the core CPI was boosted by a 0.3 percent increase in rents, which followed a similar gain in January. The price index for personal consumption expenditures, the Federal Reserve’s preferred inflation gauge, rose 1.3 per cent from a year earlier.
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In a separate Labor Department report Wednesday, Americans’ average weekly earnings, adjusted for inflation declined 0.5%. Prescription drug prices rose 0.9 percent, while the cost of hospital services increased 0.5 percent.
