US Inflation Rate Remains at 2.9%, but Consumer Prices Jump 0.4% in February 2012
While the annual percentage rate remained unchanged, US inflation climbed sharply in February as soaring gasoline costs drove the biggest monthly increase in consumer prices since April 2011.
Consumer prices rose 0.4 percent in February after an increase of 0.2 percent in January, the US government reported today in Washington. The cost of food was actually flat last month, marking the first time food prices have not advanced since July 2010. But energy prices surged in February as prices at the pump jumped 6.0 percent.
"The gasoline index rose sharply in February, accounting for over 80 percent of the change in the all items index. The gasoline increase led to a 3.2 percent rise in the energy index despite a decline in the index for natural gas," the US Labor Department said in its monthly Consumer Price Index (CPI) report which is the government’s key measure of US inflation.
"The food index was unchanged in February, with the food at home index unchanged for the second month in a row as major grocery store food indexes were mixed."
Stripping out food and energy prices, which tend to be more volatile, the so-called core US inflation rate rose 0.1 percent in February after rising 0.2 percent in January. Many economists had expected a reading of 0.2 percent.
"Inflationary pressures remain minimal. There is no indication that higher energy prices are leading to price increases for other goods, and in fact inflation outside of food and energy is slowing," PNC Financial economist Gus Faucher said according to USA TODAY.
"Firms are trying to hold the line on price increases given still-soft demand, and weak wage growth and high profit margins give them flexibility."
US inflation rose 2.9 percent in the last 12 months, equaling the same pace ending in January. The annual rate was at 3.9 percent as recently as September.
The core US inflation rate rose 2.2 percent over the past year after climbing 2.3 percent in January which had been the biggest 12-month increase since September 2008. The amount continues to be a bit higher than the Fed’s 2.0 percent target, although that is seen as temporary according to the latest FOMC statement released on Tuesday.
"Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable," stated the Fed’s FOMC statement for February which was released on March 13.
"The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate," the statement added.
Some, not all, economists agree.
"Despite the spike in energy prices, which should have only temporary effects on CPI inflation, the downward trajectory for consumer price inflation remains largely intact," Reuters quoted Millan Mulraine, senior macro strategist at TD Securities in New York.
"We expect the benign inflationary backdrop and weak pace of slack absorption the economy to provide a supportive environment for monetary policy," he added
The following table provides US Labor Department inflation data ranging from August to February and on a 12-month basis.
February 2012 Consumer Prices – Gains (percent)
|Food at home||0.6||0.6||0.1||-0.1||0.3||.0||.0||4.5|
|Food away from home||0.4||0.2||0.2||0.3||0.2||0.4||0.1||3.1|
|Gasoline (all types)||1.9||2.9||-3.1||-2.4||-2.0||0.9||6.0||12.6|
|Utility (piped) gas service||2.2||0.8||-3.0||-4.4||-0.8||-2.9||-3.4||-9.8|
|All items less food, energy||0.2||0.1||0.1||0.2||0.1||0.2||0.1||2.2|
|Comm. less food, energy||0.4||-0.2||-0.1||0.1||-0.2||0.2||0.1||2.0|
|Used cars and trucks||0.9||-0.6||-0.6||-0.1||-0.9||-1.0||-0.2||2.9|
|Services less energy||0.2||0.2||0.2||0.2||0.3||0.2||0.1||2.2|
The US Labor Department will publish March 2012 Consumer Price Index information on April 13, 2012 at 8:30 AM Eastern Time. Current and historic CPI data is used as the core data for the US Inflation Calculator.