WASHINGTON – U.S. consumer prices rose at a slower pace last month, government data showed on Wednesday, as energy costs moderated compared with the previous month's surge.
The consumer price index (search), the most widely used gauge of U.S. inflation, climbed 0.3 percent in February after 0.5 percent the month before, the Labor Department (search) said. Wall Street had expected a 0.3 percent monthly increase.
So-called core CPI, which strips out the volatile components food and energy, advanced 0.2 percent against 0.2 percent in January.
On a year-on-year basis, core inflation crept up slightly to 1.2 percent, versus the 38-year low of 1.1 percent, which had prevailed in November, December and January.
Very low core inflation last year sparked fears of deflation. These concerns have since receded but core prices are still watched closely by the Federal Reserve (search), which on Tuesday held interest rates at a post-1958 low of 1.00 percent.
The Fed also said "the probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation."
Some Fed policymakers have noted that rising oil prices might at some point be a factor to take into account, and Wednesday's CPI report said energy inflation advanced again last month after crude oil prices hit a post-Iraq war high and remained well above $30 per barrel.
Energy costs, as measured in the CPI, rose 1.7 percent in February after jumping 4.7 percent the month before.
Food prices were 0.2 percent higher after being unchanged in January while the cost of apparel declined 0.1 percent after a 0.3 percent fall the previous month.
Real average earnings decreased by 0.1 percent from January to February, Labor said, compared with January's 0.3 percent rise. Economists say that the weak labor market is curbing wage growth, helping companies keep more of the profits as output picks up but potentially undermining consumer spending as the recovery advances.