Breaking News Bar
updated: 3/15/2013 8:09 AM

Gas spike drives U.S. consumer prices up 0.7 percent

hello
Success - Article sent! close
 
Associated Press

WASHINGTON -- A spike in gas prices drove a measure of U.S. consumer costs up in February by the most in more than three years. But outside the gain in fuel costs, inflation was mostly modest.

The consumer price index increased a seasonally adjusted 0.7 percent last month from January, the Labor Department said Friday. It was the biggest monthly rise in the index since June 2009.

Order Reprint Print Article
 
Interested in reusing this article?
Custom reprints are a powerful and strategic way to share your article with customers, employees and prospects.
The YGS Group provides digital and printed reprint services for Daily Herald. Complete the form to the right and a reprint consultant will contact you to discuss how you can reuse this article.
Need more information about reprints? Visit our Reprints Section for more details.

Contact information ( * required )

Success - request sent close

Still, three-fourths of the increase in the index reflected a 9.1 percent surge in gas prices. That was also the biggest monthly gain since June 2009. Gas prices had fallen in the previous four months. Since last month's increase they have fallen slightly.

For the 12 months that ended in February, prices increased 2.0 percent. That's in line with the Federal Reserve's inflation target.

"Aside from the spike in gasoline prices, which is already being reversed, it is hard to find any evidence of major price pressures," said Paul Dales, senior U.S. economist for Capital Economics.

Excluding volatile food and energy costs, core inflation rose just 0.2 percent in February. Prices for cars fell 0.3 percent, the largest monthly decline in three years. Airline fares and clothing prices also fell. Monthly rents and used car prices increased.

Over the past 12 months, core prices have risen just 2 percent.

"Aside from the spike in gasoline prices, which is already being reversed, it is hard to find any evidence of major price pressures," said Paul Dales, senior U.S. economist for Capital Economics.

Low inflation leaves consumers with more money to spend, which benefits the economy. It also allows the Federal Reserve leeway to keep interest rates low to help spur economic growth.

In February, total energy costs rose 5.4 percent. In addition to gasoline, prices for natural gas and home heating oil also showed big gains.

Food prices grew just 0.1 percent. Prices for fruits and vegetables jumped 1.4 percent jump. Meat, poultry and fish prices increased 0.5 percent. Most other food prices declined.

Gas prices rose sharply in February after falling at the end of 2012. The national average price for a gallon of gas jumped from $3.42 on Jan. 31 to $3.78 on Feb. 28.

Since then, however, gas prices have come down a bit. They averaged $3.70 per gallon on Thursday, according to AAA's Daily Fuel Gauge Report.

An increase in gas prices also drove a measure of wholesale prices up in February by the most in five months. The government said the producer price index rose 0.7 percent last month. The index measures prices before they reach the consumer.

Wholesale gas prices were up 7.2 percent in February and economists were looking for prices that motorists paid at the pump to rise as well.

The unemployment rate is still high at 7.7 percent. As long as the inflation outlook stays mild, the Fed said it plans to keep the short-term interest rate it controls near zero until the unemployment rate falls to at least 6.5 percent. The Fed will hold a two-day meeting next week and economists expect the central bank will keep its low interest rate policies unchanged.

Share this page
Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.