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US core consumer prices march higher in February
[WASHINGTON] Underlying US inflation increased more than expected in February as rents and medical costs maintained their upward trend, which could keep the Federal Reserve on course to gradually raise interest rates this year.
The Labor Department said on Wednesday its Consumer Price Index, excluding the volatile food and energy components, increased 0.3 per cent after a similar gain in January.
In the 12 months through February, the so-called core CPI rose 2.3 per cent, the largest gain since May 2012, after increasing 2.2 per cent in January.
Economists polled by Reuters had forecast the core CPI rising 0.2 per cent last month and increasing 2.2 per cent from a year ago.
The report came ahead of the conclusion of a two-day Fed meeting on Wednesday. The US central bank is expected to leave interest rates unchanged. But with inflation stirring and the labor market continuing to tighten, economists believe the Fed will raise rates in June.
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.
Last month, the core CPI was boosted by a 0.3 per cent increase in rents, which followed a similar gain in January.
Medical care costs rose 0.5 per cent after advancing by the same margin in January. Prescription drug prices rose 0.9 per cent, while the cost of hospital services increased 0.5 per cent. There were also increases in the price of apparel, which rose 1.6 per cent, the largest gain since February 2009.
Prices for new motor vehicles and used cars and trucks also rose.
But a 13 per cent drop in gasoline prices, which offset both the increase in core CPI and a 0.2 per cent gain in food prices, lead to the overall CPI falling 0.2 per cent last month. The CPI was unchanged in January.
The drop resulted in the CPI increasing 1.0 per cent in the 12 months through February, slowing after a 1.4 per cent rise in January.