US consumer prices rose marginally in February, but the lack of inflation pressures will probably not dissuade the Federal Reserve from scaling back its monetary stimulus.
The US Labor Department said today that its Consumer Price Index nudged up 0.1% as a decline in petrol prices offset an increase in the cost of food.
The CPI had ticked up 0.1% in January and last month's gain was in line with economists' expectations.
In the 12 months to February, consumer prices increased 1.1%, slowing from a 1.6% rise in January. The February increase was the smallest rise since October last year.
Stripping out the volatile energy and food components, the so-called core CPI also rose 0.1% for a third month in a row. In the 12 months to February, core CPI rose 1.6% after rising by the same margin in January.
Consumer inflation is running below the Fed's 2% target, which suggests interest rates will probably remain near record low levels even as the bank cuts back on the amount of money it is injecting into the economy each month.
With job growth accelerating and industrial production and consumer spending strengthening, economists expect the Fed to announce another $10 billion reduction to its monthly bond purchases when policymakers end a two-day meeting on Wednesday night.
Last month, food prices rose 0.4%, the largest increase since September 2011. That accounted for more than half of the increase in the CPI last month. There were also big increases in the prices of meat, fish, poultry, eggs, vegetables and fruits.
Petrol prices declined for a second month, helping to offset sharp gains in the price of heating oil and natural gas.
Within the core CPI, a 0.2% rise in the cost of shelter was the major contributor for the rise in the index. There were also increases in medical care, recreation and new vehicle prices. Prices for tobacco, used cars and trucks, clothing and household furnishings and operations fell.