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US consumer prices rise; underlying inflation slowing
[WASHINGTON] US consumer prices rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in nearly 2-1/2 years.
The report from the Labour Department on Tuesday also showed benign underlying inflation last month, which together with slowing economic growth, support the Federal Reserve's "patient" approach towards further interest rate increases this year.
The Consumer Price Index increased 0.2 per cent, lifted by gains in the costs of food, gasoline and rents. The CPI had been unchanged for three straight months.
In the 12 months through February, the CPI rose 1.5 per cent, the smallest gain since September 2016. The CPI increased 1.6 per cent on a year-on-year basis in January.
Excluding the volatile food and energy components, the CPI edged up 0.1 per cent, the smallest increase since Aug 2018. The so-called core CPI had increased by 0.2 per cent for five straight months.
In the 12 months through February, the core CPI rose 2.1 per cent. The core CPI had increased by 2.2 per cent for three consecutive months on an annual basis. Economists polled by Reuters had forecast the CPI and the core CPI edging up 0.2 per cent in February.
The Fed, which has a 2 per cent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.
The core PCE price index increased 1.9 per cent on a year-on-year basis in December after a similar gain in November. It hit the US central bank's 2 per cent inflation target in March last year for the first time since April 2012.
Slowing domestic and global growth are keeping inflation in check even as a tight labour market is driving up wages. Annual wage growth jumped 3.4 per cent in February, the biggest increase since April 2009, from 3.1 per cent in January.
In February, gasoline prices rose 1.5 percent after falling 5.5 per cent in January. Food prices increased 0.4 per cent, the biggest rise since May 2014, after gaining 0.2 per cent in January. Food consumed at home rose 0.4 per cent last month, boosted by more expensive dairy products, fresh vegetables, cereals and meat.
Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 per cent in February, as it did in January.
Healthcare costs fell 0.2 per cent after five straight monthly increases. They were held down by a 1.0 per cent decline in the price of prescription medication and a 0.7 per cent drop in the cost of hospital services. The cost of doctor visits edged up 0.1 per cent last month.
Apparel prices rose 0.3 per cent. That followed a 1.1 per cent jump in January. There were increases in the prices of motor vehicle insurance, airline fares, household furnishings and personal care products.
But prices for new motor vehicles, used cars and trucks, as well as recreation fell. The cost of communication services was unchanged in February for a third straight month.