A report released by the Labor Department on Wednesday showed a modest increase in U.S. consumer prices in the month of February.
The Labor Department said its consumer price index inched up by 0.1 percent in February, matching the uptick seen in January. Economists had expected prices to come in unchanged.
Consumer prices edged higher as higher prices for food and shelter more than offset a steep drop in energy prices.
The report said food prices climbed by 0.4 percent in February after edging up by 0.2 percent in January, with prices for food at home showing the largest monthly increase since May of 2014.
The shelter index also rose by 0.3 percent in February following a 0.4 percent increase in the previous month.
Meanwhile, energy prices plunged by 2.0 percent in February after falling by 0.7 percent in January, as all of the major energy component indexes declined
The Labor Department said core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the second consecutive month. The increase in core prices matched economist estimates.
Along with the index for shelter, the indexes for apparel, personal care, used cars and trucks, education, and medical care all increased during the month, while the indexes for recreation and airline fares fell.
Compared to the same month a year ago, consumer prices were up by 2.3 percent in February, reflecting a slowdown from the 2.5 percent jump in January.
On the other hand, the report said the annual rate of growth in consumer prices edged up to 2.4 percent in February from 2.3 percent in the previous month.
"The drop back in CPI inflation to 2.3% in February, from 2.5%, is a sign of things to come, with the plunge in crude oil prices likely to drag headline CPI inflation below 1.0% in the coming months," said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, "With underlying price pressures remaining contained, there is nothing in the incoming inflation data to stop the Fed from lowering rates to near-zero in the coming weeks and keeping them there for an extended period."
The Labor Department is scheduled to release a separate report on Thursday on producer price inflation in the month of February.
Producer prices are expected to edge down by 0.1 percent in February after climbing by 0.5 percent in January, while core prices are expected to inch up by 0.1 percent after rising by 0.5 percent.
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