U.S. consumer prices rose a modest 0.1 percent last month, both overall and excluding food and energy, the government said on Thursday in a report showing even less inflation pressure than Wall Street expected.

A sharp 1.2 percent decrease in energy costs in February helped keep the consumer price index in check, the Labor Department report showed. In addition, food prices rose just 0.1 percent.

But even outside of those two often-volatile areas, price increases were mostly moderate.

The department said four-fifths of the slight increase in the core index was due to a 0.4 percent gain in shelter costs. A 1 percent drop in clothing prices helped offset that rise.

While the 0.1 percent rise in overall prices matched expectations on Wall Street, forecasters had expected core prices to increase 0.2 percent.

Over the past 12 months, consumer prices have risen 3.6 percent, marking a deceleration from the energy-led 4 percent gain posted in the period through January.

The 12-month change in the core CPI held steady at 2.1 percent.

While electricity costs moved up 0.4 percent last month, gasoline prices tumbled 1 percent, natural gas prices fell 4.5 percent and the price of fuel oil dropped 2.8 percent.

The drop in energy prices, which had risen a sharp 5 percent in January, helped workers keep pace with inflation. The department said inflation-adjusted weekly earnings were flat last month.

However, over the past year workers still have lost some ground, with real weekly earnings down 0.1 percent.

The report should help ease fears of rising prices in financial markets and at the Federal Reserve, where officials have warned that core inflation was running at the upper end of their comfort zone.

Fed officials are expected to bump benchmark overnight interest rates up by a quarter-percentage point to 4.75 percent at their next meeting on March 27-28. But policy-makers have said that after a string of increases dating to June 2004, the path ahead is less certain.