Washington: The United States consumer prices recorded their largest increase in nearly four years in February as the cost of gasoline surged, but details of the report yesterday showed no sign of a pickup in inflation to trouble the Federal Reserve. The Labour Department said its Consumer Price Index increased 0.7 per cent last month, the largest gain since June 2009, after being flat in January. Gasoline accounted for about three quarters of the spike in consumer inflation. Economists polled by Reuters had expected the CPI to advance 0.5 per cent.
In the 12-months through February, consumer prices rose 2 per cent, the largest gain since October. They had increased 1.6 per cent in January. Fed officials are likely to dismiss the gasoline-driven jump in price pressures as temporary when they meet next week to evaluate the economy.
Gasoline rose 9.1 per cent, the largest gain since June 2009, after falling 3 per cent in January. Gas prices at the pump, however, have declined in the past two weeks. Excluding food and energy, consumer prices rose 0.2 per cent slowing from January's 0.3 per cent advance.
The generally benign underlying price pressures should give the US central bank scope to keep pumping money into the economy, despite signs of improvement in labour market conditions.
The Fed last year embarked
on an open-ended bond buying programme and said it would keep it up until it saw a substantial improvement in the outlook for the labour market.
It hopes the purchases will drive down borrowing costs.
In the 12 months through February, so-called core CPI increased 2 per cent, also the largest increase since October, after rising 1.9 per cent in January.
Last month, food prices edged up 0.1 per cent after being flat in January. There is still no sign of a pass-through from last summer's drought. Housing costs maintained their steady rise. Owners' equivalent rent, which accounts for about a third of the core CPI, rose 0.2 per cent after a similar gain in January. Apparel prices fell 0.1 per cent.
after increasing 0.8 per cent in January. New motor vehicle prices fell 0.3 per cent after gaining 0.1 per cent the prior month. Prices for used cars and trucks rose for a second straight month.