U.S. Inflation Rises at 2.1% Annual Rate, Consumer Prices Flat in February

The American cost of living climbed from a year ago due to higher energy bills, but those same energy costs fell in February to help keep consumer prices in check for the month, the Labor Department reported Thursday.

The Consumer Price Index (CPI), which is the government’s most closely watched barometer for measuring inflation at the consumer level, was flat in February, breaking away from five straight months of 0.2% increases. The month marks the first time since March 2009 when consumer prices did not climb, indicating tame inflation and reinforcing the Fed’s recent statement saying that inflation would remain subdued for "some time."

"Inflation is certainly no imminent threat to the U.S. economy," David Resler, chief economist at Nomura Securities International Inc. in New York, said on Bloomberg. Resler forecasted that prices would remain unchanged "It ties in with the Fed’s statement," he added.

The energy pricing index fell 0.5% in February after rising 2.8% during the prior month. Food prices rose a modest 0.1%.

Striping out volatile food and energy prices, core consumer prices rose 0.1% last month following a decline of 0.1% in January.

“Core inflation continues to be a non-issue in the near-future, so the Fed’s easy monetary policy can continue into the third and fourth quarter of this year without inflation being an issue,” Adam York, an economist at Wells Fargo, said on CNNMoney.com.

Annual inflation advanced 2.1% versus the 12-month rate of 2.6% reported in January. Costs in the past year were again led by energy prices which increased 14.4%.

The core rate was up 1.3% during the same time frame — the smallest gain since February 2004. The inflation level is right within the Federal Reserve’s comfort range of 1%-2%.

February Consumer Price Details

Rising prices include:

  • Used car and truck prices rose 0.7% after a 1.5% increase. They are up 14.1% over the past
    year
  • New vehicles prices rose 0.1% following a decline of 0.5% in January. They are 3.5% higher on the year.
  • Natural gas costs were up 3.9% in February after increasing 3.5% in January
  • Food prices moved up 0.1%, although they are down 0.2% over the past 12 months
  • Medical care expenses climbed 0.5% for the second straight month

Declining prices include:

  • Energy prices declined 0.5% in February after rising 2.8% in January, which was the ninth consecutive increase. Over the past 12 months, energy has risen 14.4%.
  • Gasoline prices fell 1.4% after jumping 4.4%. They have soared 36.8% in the past 12 months.
  • Shelter costs, which account for about 1/3 of the CPI, were flat in February. They are down 0.4% over the past year.
  • Fuel oil prices were down 2.4% following a 6.1% increase. They are up 19.3% on the year.
  • Airfares decreased 0.7% after declining 2.5% in January
  • The index for electricity declined 0.5% — its third consecutive decrease
  • Clothing prices fell 0.7% following a decline of 0.1%
  • Dairy and related products decreased 0.1% after jumping 2.1% in January
  • Prices for fruits and vegetables decreased 0.1%

To compare how the buying power of the U.S. dollar has changed over time, check out the updated Inflation Calculator.

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