With energy prices showing a substantial increase, the Labor Department released a report on Friday showing a moderate increase in U.S. consumer prices in the month of February.
The Labor Department said its consumer price index rose by 0.4 percent in February following a 0.2 percent increase in January. Economists had expected the index to increase by about 0.5 percent.
The increase in consumer prices was largely due to a 3.2 percent jump in energy prices, which came after a 0.2 percent increase in the previous month.
Gasoline prices surged up 6.0 percent in February, contributing to the increase in energy prices. The increase marked the fastest rate of gas price growth since December of 2010.
The Labor Department noted that the increase in gas prices more than offset a drop in prices for household energy, which fell by 0.6 percent.
Meanwhile, the report also showed that food prices came in unchanged in February after creeping up by 0.2 percent in January.
Excluding food and energy prices, the core consumer price index edged up by 0.1 percent in February compared to a 0.2 percent increase in the previous month. Core prices had been expected to increase by about 0.2 percent.
The increase in core prices reflected a 0.8 percent increase in medical care commodities as well as a 0.6 percent increase prices for new vehicles, which rose for the first time since June.
Compared to the same month a year ago, the headline consumer price index was up by 2.9 percent in February, while core prices rose at an annual rate of 2.2 percent.
Rob Carnell, chief international economist at ING Bank, said, "We don't expect this to be the peak for core inflation, and our models suggest a further increase, taking it to somewhere in the 2.7-2.8% area before it begins to level off."
"Likewise, absent a sharp correction in oil prices, headline inflation has probably already troughed, and will head above 3.0% in coming weeks, to peak somewhere in the mid 3's, depending on what oil does from here," he added.
The Labor Department released a separate report on Thursday showing that its producer price index rose by 0.4 percent in February following a 0.1 percent increase in January. Economists had expected the index to increase by 0.5 percent.
The core producer price index edged up by 0.2 percent in February compared to a 0.4 percent increase in the previous month. The increase in core prices came in line with economist estimates.
by RTT Staff Writer
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