US consumer prices rebound, underlying inflation firming

US consumer prices rebounded in February as gasoline prices rose for the first time since June, and there were also signs of an uptick in underlying inflation pressures, which could keep a June interest rate increase on the table. 

PHOTO: REUTERS

24 Mar9:07 PM

[WASHINGTON] US consumer prices rebounded in February as gasoline prices rose for the first time since June, and there were also signs of an uptick in underlying inflation pressures, which could keep a June interest rate increase on the table.

The Labour Department said on Tuesday its Consumer Price Index increased 0.2 per cent last month after declining 0.7 per cent in January. That ended three straight months of declines in the index.

In the 12 months through February, the CPI was unchanged after slipping 0.1 per cent in January. Economists polled by Reuters had expected the CPI to rise 0.2 per cent from January and slip 0.1 per cent from a year ago.

Federal Reserve officials have long viewed the energy-driven weakness in inflation as transitory. The US central bank, which has a 2 per cent inflation target, has kept its short-term interest rate near zero since December 2008.

Fed Chair Janet Yellen said last week policymakers could raise interest rates when they had "seen further improvement in the labour market" and were "reasonably confident that inflation will move back to its 2 per cent objective over the medium term."

The so-called core CPI, which strips out food and energy costs, increased 0.2 per cent in February after a similar gain in January. In the 12 months through February, the core CPI rose 1.7 per cent, the largest increase since November.

Crude oil prices fell 60 per cent between June and January on fears of a global oil glut and the refusal of Saudi Arabia and other OPEC members to cut output. In February, Brent stabilized at around US$60 and US crude at around US$50.

Last month, domestic gasoline prices rose 2.4 per cent, the largest increase since December 2013, after tumbling 18.7 per cent in January. Gasoline prices had declined for seven straight months.

Food prices increased 0.2 per cent. Elsewhere, shelter costs increased 0.2 per cent, accounting for about two-thirds of the increase in the core CPI. Shelter costs had advanced 0.3 per cent in January.

Apparel prices rose 0.3 per cent in February after a similar gain in January. There were also increases in airfares, new motor vehicle and used cars and trucks prices. However, the cost of medical care services declined for the first time since 1975.

REUTERS