U.S. Consumer Prices Up 0.4%

March 16, 2007
Energy, food and apparel prices increased.

Signaling inflation that is slightly above most market expectations, consumer prices rose 0.4% in February, the Labor Department said March 16.

But the "core" CPI index, which excludes volatile food and energy costs, was up a more modest 0.2%, in line with market forecasts.

Over the past 12 months, consumer prices have risen 2.4% and the core index is up 2.7%.

In February, a 0.9% leap in energy prices drove up the CPI index after energy costs fell 1.5% in January. Food prices rose 0.8% in February after rising 0.7% in January. Apparel prices were up 0.5% in the month, while transportation prices rose 0.1%.

Robert Brusca at FAO Economics said the CPI report was "as expected but still not good." Consumer prices do not always reflect higher wholesale costs because these are sometimes absorbed by retailers, and CPI has a major component of services that do not involve goods at the wholesale level. But Brusca said inflation trends may be hotter than the Federal Reserve would like. "International competition is doing little to tame the inflation pressure in the services sector," he said.

The Federal Reserve halted a string of rate hikes in August with its base rate at 5.25%, but has warned it may resume rate increases if inflation is a threat. But some economists are expecting the Federal Open Market Committee (FOMC) to cut rates later this year to stimulate flagging economic conditions.

Copyright Agence France-Presse, 2007

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