Core CPI up 1.3% in past year, smallest gain in 6 years
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) -- U.S. consumer prices were unchanged on a seasonally-adjusted basis in February, with falling energy prices offsetting increases in prices of cars, medical care and food, the Labor Department reported Thursday.
The flat reading on the consumer price index was exactly as expected by economists surveyed by MarketWatch.
The core consumer price index -- which excludes food and energy prices -- rose 0.1%, also as expected by economists surveyed by MarketWatch. See our complete economic calendar and consensus forecast.
In the past year, the CPI has risen 2.1%. The core rate is up 1.3% in the past year, the smallest year-over-year increase in six years. Read the full report on the BLS website.
The CPI report shows very little inflationary pressure at the consumer level, giving the Federal Reserve the space to keep interest rates low in an attempt to stimulate the economy and boost employment.
Officials at the Fed have reiterated that they believe inflation will be modest over the next several years because excess capacity in the economy -- including 15 million unemployed workers -- will keep pricing power low.
On Tuesday, the Federal Open Market Committee repeated that it believed the Fed's target for short-term interest rates should stay extremely low for an extended period of time as the economy begins to heal and job growth slowly recovers. See full story on the FOMC meeting.
Falling shelter costs have been the major factor keeping the CPI subdued. Shelter costs -- which account for more than 32% of the CPI -- have fallen 0.4% over the past year.
In February, owners' equivalent rent and residential rents were unchanged.
In a separate report, the Labor Department said first-time claims for state unemployment benefits fell for the third straight week to 457,000. See our full story on jobless claims.
More details of CPI
In February, energy prices fell 0.5%, the largest decline in 10 months. Gasoline prices fell 1.4%, and fuel-oil prices dropped 2.4%.
Food prices increased 0.1%, led by a 0.4% gain in meat prices.
Dairy and vegetable prices fell 0.1%.
With consumer prices flat and nominal hourly earnings up 0.1%, real (inflation-adjusted) hourly earnings rose 0.1% in February.
Over the past six months, real earnings have been essentially unchanged.
Medical costs rose 0.5% in February. Prescription drug prices rose 0.6%.
Apparel costs fell 0.7%, the most since late 2008. Recreation costs fell 0.1%.
New-car prices rose 0.1%, while used-car prices rose 0.7%. Airfares fell 0.7%.
