March 19, 2019

US consumer prices cool in February

14 March 2019, 04:35 | Joann Bryant

Consumer Inflation Rises To 2.57% In February

Retail inflation climbs to 2.57%, factory output decelerates to 1.7%

The Labor Department said on Tuesday its consumer price index grew 0.2 percent in February due to gains in the costs of food, gasoline and rents.

The consumer-price index, which measures what Americans pay for everything from lipstick to used trucks, rose a seasonally adjusted 0.2% in February, the Labor Department said Tuesday, snapping three consecutive months of flat readings.

Accordingly, the Consumer Food Price Index (CFPI) in the month under review stood at (-) 0.66 per cent from 3.26 per cent in February 2018. The earlier lowest inflation was 2.33 per cent in November 2018.

The Fed, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.

Food price inflation for urban areas stood at 1.27 in February 2019 against (-) 0.96 per cent in January 2019 and 2.45per cent in February past year. Food inflation was in the negative at 0.66 per cent.

On a sub-category basis, vegetable prices reduced on YoY basis in January by (-) 7.69 per cent. The key shelter category rose 0.3% in February, and is up 3.4% on a year-on year basis.

Prices of milk-based products rose marginally by 0.92 per cent, while egg became dearer by 0.86 per cent, and meat and fish prices recorded a rise of 5.92 per cent. The CPI increased 1.6% on a year-on-year basis in January.

B Prasanna, Head, Global Markets Group, ICICI Bank said, "Headline inflation for February moved upwards to 2.57 per cent as per our expectations". It hit the United States central bank's 2% inflation target in March 2018 for the first time since April 2012.

The public's inflation expectations fell in February, according to the Federal Reserve Bank of New York's latest Survey of Consumer Expectations.

However the average workweek declined in February, given a 0.3% drop in average weekly hours. But excluding food and fuel costs, the core CPI fell short of a forecasts, rising only 0.1 percent. The central bank also changed its policy stance from "calibrated tightening" to "neutral". They were held down by a 1.0 per cent decline in the price of prescription medication and a 0.7 per cent drop in the cost of hospital services.

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