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U.S. Consumer Prices Tame In February

By Agence France-Presse American consumer price inflation appeared tame in February, data showed March 17, safeguarding key interest rates at a 1958 low, at least for now. Analysts detected emerging price pressures, however, throwing doubt on how long Federal Reserve Chairman Alan Greenspan and his colleagues can put off a rise in rates. Consumer prices rose a seasonally adjusted 0.3% in February, slowing from a 0.5% increase in January, the U.S. Bureau of Labor Statistics said. Over the year, prices were up 1.7%. Energy costs, jacked up by the crude oil market, fueled much of the increase. Core consumer prices -- excluding volatile food and energy items -- rose by a more modest 0.2%. Over the year, core prices were up 1.2%. "Inflation is indeed reasonably low, but it also seems there are some pressures beginning to build," said Naroff Economic Advisors President Joel Naroff. More and more components of the consumer price index were showing gains, he said. "It may be early in the process, but it is beginning," Naroff said. "What the Fed does about building inflationary pressures if there are no job gains will be fascinating." A breakdown of the February consumer price data showed: Energy prices climbed 1.7% in February, after soaring 4.7% in January, with gasoline prices surging 2.5% and natural gas rising 2.2%. Food prices rose 0.2% after being flat in January as high vegetable prices outweighed a 1.6% slump in beef and veal prices. Prices for core consumer commodities, stripping out energy and food, rose 0.2%, the first increase in 18 months. "The change in the CPI over the past couple of months -- and make no mistake, it is a big change -- is that goods prices have suddenly begun to rise," said High Frequency Economics chief U.S. economist Ian Shepherdson. "If this continues, then even modest gains in payrolls will force the Fed to tighten well before the end of the year." Copyright Agence France-Presse, 2004

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