US consumers see prices rise
By Lucia Mutikani |
March 18, 2011, Friday
|
Print Edition
Print Edition
UNITED States consumer prices rose at their fastest pace in more than 1-1/2 years in February, driven by higher food and energy prices, but underlying inflation pressures remained generally contained.
The Labor Department said yesterday its Consumer Price Index rose 0.5 percent, the largest gain since June 2009, after increasing 0.4 percent in January. Core CPI - excluding food and energy - rose 0.2 percent after gaining by the same margin in January.
Though the increase in core CPI was a touch above economists' expectations for a 0.1 percent gain, it suggested that surging costs for energy and other commodities, which have been hitting producers and consumers alike, had yet to generate the type of broad inflation that would spur the Federal Reserve to respond.
The Fed said on Tuesday it expected the upward price pressure from commodities to be temporary but it would closely monitor inflation and inflation expectations.
"I don't think it means anything for the Fed. They're going to probably wind up saying some of this is transitory. It won't be sustained," said Tom Porcelli, US economist at RBC Capital Markets in New York.
In another report, the department said initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 385,000 last week, broadly in line with expectations, hinting at a strengthening in the labor market.
The four-week moving average of unemployment claims - a better measure of underlying trends - dropped 7,000 to 386,250, the lowest since mid-July 2008 and staying below the 400,000 level for a third straight week.
US stock index futures pared gains on the inflation data, while prices for government debt held onto earlier losses. The dollar pared losses versus the euro.
Rising food and energy prices are exerting upward pressure in some major economies and putting monetary authorities on the edge. But high unemployment in the US, which is restraining wage growth, is seen dampening inflation pressures from the strong commodity prices.
In the 12 months to February, overall consumer prices rose 2.1 percent, the largest climb since April, after rising 1.6 percent in January. Core CPI rose 1.1 percent annually, the largest increase in one year, after increasing 1 percent in January.
The Labor Department said yesterday its Consumer Price Index rose 0.5 percent, the largest gain since June 2009, after increasing 0.4 percent in January. Core CPI - excluding food and energy - rose 0.2 percent after gaining by the same margin in January.
Though the increase in core CPI was a touch above economists' expectations for a 0.1 percent gain, it suggested that surging costs for energy and other commodities, which have been hitting producers and consumers alike, had yet to generate the type of broad inflation that would spur the Federal Reserve to respond.
The Fed said on Tuesday it expected the upward price pressure from commodities to be temporary but it would closely monitor inflation and inflation expectations.
"I don't think it means anything for the Fed. They're going to probably wind up saying some of this is transitory. It won't be sustained," said Tom Porcelli, US economist at RBC Capital Markets in New York.
In another report, the department said initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 385,000 last week, broadly in line with expectations, hinting at a strengthening in the labor market.
The four-week moving average of unemployment claims - a better measure of underlying trends - dropped 7,000 to 386,250, the lowest since mid-July 2008 and staying below the 400,000 level for a third straight week.
US stock index futures pared gains on the inflation data, while prices for government debt held onto earlier losses. The dollar pared losses versus the euro.
Rising food and energy prices are exerting upward pressure in some major economies and putting monetary authorities on the edge. But high unemployment in the US, which is restraining wage growth, is seen dampening inflation pressures from the strong commodity prices.
In the 12 months to February, overall consumer prices rose 2.1 percent, the largest climb since April, after rising 1.6 percent in January. Core CPI rose 1.1 percent annually, the largest increase in one year, after increasing 1 percent in January.
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