BCN-14 US consumer prices cool in February

527

ZCZC

BCN-14

US-ECONOMY-INFLATION-INDICATOR

US consumer prices cool in February

WASHINGTON, March 12, 2019 (BSS/AFP) – The falling price of energy drove US
consumer inflation in February to its slowest annual pace more than two
years, according to government data released Tuesday.

The dip in the Consumer Price Index marked the seventh straight decline,
and supports the Federal Reserve’s recent decision to pause interest rate
increases until further notice.

However, weakening fuel prices masked increases in the costs for food and
shelter, medical care, according to the Labor Department report.

Compared to February of last year, CPI rose 1.5 percent, down from 1.6
percent in January, driven by a five percent drop in energy, which was the
largest decline in two and a half years.

The annual inflation measure has been steadily declining since July.

Excluding the volatile food and fuel categories, CPI slowed to 2.1 percent,
after three months of 2.2 percent gains.

Prescription drug costs fell 1.2 percent compared to February 2018,
offsetting rising costs of hospital services and doctors’ fees, along with a
3.4 percent jump in shelter, up from 3.2 percent in January.

Monthly inflation was 0.2 percent compared last month to January after
being flat for three months, matching economists’ expectations. But excluding
food and fuel costs, the core CPI fell short of a forecasts, rising only 0.1
percent.

Ian Shepherdson of Pantheon Macroeconomics said he expected the 12-month
CPI measure to remain tame until the middle of this year, when low
unemployment is likely to speed gains in worker pay.

“At that point, we think wage growth will be at or above 4 percent, posing
awkward questions for the Fed if rates have remained at their current level,”
he wrote in a note to clients.

The Fed raised interest rates four times last year but since December
policymakers have stressed that they will be “patient” before hiking rates
again — noting increasing signs of an economic slowdown worldwide and in the
United States with few signs of accelerating inflation.

BSS/AFP/SR/1930 HRS