Published: Thu, March 14, 2019
Markets | By Otis Pena

Consumer inflation rises to 2.57 per cent in February

Consumer inflation rises to 2.57 per cent in February

As the Federal Reserve takes a break from raising short-term interest rates, a surprise uptick in inflation could potentially be a red flag. As per an official statement Consumer inflation for January was revised downwards to 1.97 per cent, also its lowest level in 19 months, from 2.05 per cent. School tuition and child care costs have increased 3 percent over the past 12 months.

"Core inflation eased up a bit in February, as prices rose 0.1% (0.11% before rounding) after five months of 0.2% gains". That index tends to run slightly below the Labor Department's CPI, and January figures are due March 29.

In the 12 months through February, the core CPI rose 2.1 per cent.

Prescription-drug prices fell 1% on a monthly basis, the most on record, bringing the annual decline to 1.2% - the largest drop since 1972.

Economists surveyed by The Wall Street Journal expected consumer prices rose 0.2% in February, and core prices to rise 0.2% as well.

In the fuel and light category, the rate of price rise slowed to 1.24 per cent from 2.20 per cent in January. It hit the USA central bank's 2% inflation target in March 2018 for the first time since April 2012.

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Slowing domestic and global growth are keeping inflation in check even as a tight labour market is driving up wages. This marks the strongest inflation-adjusted wage growth since November 2015, an increase that would likely help consumer spending and economic growth.

US stock index futures rose while US Treasury yields edged lower after the release of Tuesday's data. The dollar pared gains against the yen and extended losses against the euro.

Consumer price inflation for the rural areas stood at 1.81 per cent in February 2019 against 1.29 per cent in January, and 4.45 per cent in February 2018. Food costs gained 0.4 percent, the biggest increase since 2014.

On a sub-category basis, vegetable prices reduced on YoY basis in January by (-) 7.69 per cent. The two lead indicators of IIP - primary goods (1.4 per cent) and intermediate goods (-3 per cent) - portray a weak industrial growth profile. The cost of communication services was unchanged in February for a third straight month.

But prices for new motor vehicles, used cars and trucks, as well as recreation fell.

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