CONSUMER PRICE INDEX HIGHER IN FEBRUARY

After sinking 0.7% in January, the biggest drop in 6 years, the consumer price index rose 0.2% in February. This is attributed to a rise in gas costs and broad increases in other categories.

Outside of food and energy, the cost of rents, clothes, new and used cars and airfares all also increased 0.2% last month. Even with February’s uptick in prices, economists expect the strong dollar to keep inflation in check in coming months because it makes imported goods cheaper. The dollar has risen sharply in value in the past year compared with the euro and yen, in part because the U.S. economy is growing faster than those in Europe and Japan.

“It is too early to say inflation is turning higher,” said Jennifer Lee, an economist at BMO Capital Markets. The dollar’s strength “takes time to filter through to prices, and the recent increase will show up in coming months.”

The Fed has said in a statement that it might be appropriate for an interest rate increase after further improvement in the labor market, as long as inflation remains at its 2% target.

Source: Austin Statesman