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February Consumer Prices Unchanged

TSC Staff

A measure of U.S. consumer prices in February came in cooler than analysts expected, providing hope for the moment that inflation pressures from rate cuts and soaring commodity prices might be containable.

The Labor Department said Friday that the consumer price index for last month was unchanged from January, whereas an increase of 0.3% had been anticipated. The core rate, which excludes food and energy prices, was also unchanged and came in below the 0.2% consensus estimate.

Year over year, the CPI was up 4%, lower than the 4.3% expected increase. The core was more in line, rising 2.3%, about one-tenth of a percentage point below the estimate.

The Federal Reserve has been in difficult position in recent months because as the credit crisis has threatened economic growth, at the same time surging prices for commodities such as wheat and oil have spurred worries about prices rising too fast.

The central bank has been focusing its energies on what it sees as the greater threat -- the downturn scenario -- and opted to cut rates repeatedly and try various means to add liquidity to the financial system, such as this week's plan to lend Treasury securities to primary dealers.

Next week, the Fed will have a meeting of policymakers, and Wall Street is looking for another reduction, of as much as three-quarters of a point, in the fed funds target rate. The CPI data could enhance the chance Ben Bernanke and his colleagues will feel more comfortable with more aggressive easing.