WASHINGTON — U.S. consumer price increases eased slightly from January to February but still pointed to an elevated inflation rate that is posing a challenge for the Federal Reserve at a delicate moment for the financial system.. Yet excluding volatile food and energy costs, so-called core prices rose 0.5% in February, slightly above January’s 0.4% gain. The Fed pays particular attention to the core measure as a gauge of underlying inflation pressures.
When measured against prices a year ago, inflation has been easing for eight months. In February, consumer prices climbed 6% from 12 months earlier, down from January’s 6.4% year-over-year increase and well below a Yet it remains far above the Fed’s 2% annual inflation target. Core prices in February rose 5.5% from 12 months ago, down slightly from 5.6% in January.Nearly three-quarters of last month’s price increase was driven by housing costs.
Clothing costs rose 0.8% last month. New car prices ticked up just 0.2% for a second straight month. Used car prices fell 2.8%, the eighth straight monthly decline. “These data support a quarter-point rate hike” at the Fed’s meeting next week,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note. “The decision ultimately will depend not only on the economic data but also financial stability concerns, which could keep the Fed on the sidelines next week.”Mani Bhushan, who owns four Taco Ocho restaurants in the Dallas area, has struggled to keep up with sharply higher prices for eggs, chicken, flour and black beans.
“We would be surprised if, just one week after going to great lengths to support financial stability, policymakers risked undermining their efforts by raising interest rates again,” Hatzius wrote in a separate note Monday.
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