Inflation brakes in February - East Valley Tribune: Business

Inflation brakes in February

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Posted: Friday, March 17, 2006 4:50 am | Updated: 4:58 pm, Fri Oct 7, 2011.

WASHINGTON - Inflation, after spiking at the start of the year, slowed sharply in February, reflecting large declines in fuel prices and the cost of clothing. The Consumer Price Index edged up 0.1 percent last month, the Labor Department reported Thursday. An increase of 0.7 percent in January was driven by higher energy costs.

In February, energy prices fell by 1.2 percent. Pump prices dropped 1 percent, home heating oil was down 2.8 percent and natural gas prices fell 4.5 percent, the biggest one-month drop in 4 1/2 years.

Food prices moderated, rising just 0.2 percent. A big increase in fruit prices was offset by declines in the prices of vegetables, dairy and poultry products.

Outside of energy and food, core inflation was wellbehaved, climbing 0.1 percent. Core prices were up a moderate 2.1 percent over the past 12 months.

The core inflation figure was better than Wall Street had expected. Analysts said it should allay concerns at the Federal Reserve that the surge of energy costs over the past two years and tightening labor markets were threatening to drive inflation higher.

‘‘We may be looking at the Goldilocks economy redux,’’ said Oscar Gonzalez, an economist at John Hancock Financial Services. ‘‘The economy is expanding smartly, job growth is solid and inflation remains largely under wraps.’’

The Fed has pushed up interest rates gradually since June 2004, with the 15th rate raise expected when Ben Bernanke presides over his first meeting as chairman on March 27-28. Analysts said as long as inflation remains contained, the central bank may be nearing the end of its rate increases.

Inflation stats

THE NUMBERS: The Consumer Price Index edged up 0.1 percent in February. Higher energy costs spurred an increase of 0.7 percent in January.

ENERGY HELPED: Energy prices fell by 1.2 percent. Pump prices dropped 1 percent, home heating oil was down 2.8 percent and natural gas prices fell 4.5 percent

FOOD PRICES STEADY: Food prices moderated, rising just 0.2 percent. A big increase in fruit prices was offset by declines in the prices of vegetables, dairy and poultry products.

WHAT’S NEXT: Analysts said as long as inflation remains contained, the Federal Reserve may be nearing the end of its rate increases.

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