WASHINGTON (AP) â¿¿ Prices at the consumer level likely rose at a faster clip in February, reflecting higher gas prices. Economists were predicting that consumer prices rose 0.5 percent in February, according to a survey by FactSet. The Labor Department is scheduled to release the report at 8:30 a.m. EDT Friday. In January, consumer prices were flat compared with December. That marked the second month in a row that there was no increase in the Labor Department's consumer price index. Economists expect that situation changed in February because of a jump in energy prices. On Thursday, the government reported that the producer price index, which measures inflation before it reaches the consumer, rose 0.7 percent, the biggest increase in five months. Wholesale gas prices were up 7.2 percent in February and economists were looking for prices that motorists paid at the pump to rise as well. Over the 12 months ending in January, consumer prices had risen 1.6 percent. That was down from a 2.9 percent increase for the 12 months ending in January 2012. Excluding the volatile food and energy categories, core prices rose 0.3 percent in January and were up 1.9 percent over the past year. That is below the Federal Reserve's inflation target of 2 percent. That means the central bank has the leeway to keep pursuing its aggressive policy of promoting low interest rates to combat high unemployment. The unemployment rate dropped in February to 7.7 percent but that is still well above the 5 percent level for unemployment before the Great Recession hit in 2007-2008. Mild inflation gives the Fed the room to keep pursing policies to spur faster economic growth. However, critics have raised concerns that the policies being pushed by Fed Chairman Ben Bernanke could ultimately trigger higher inflation or create bubbles in assets such as the price of stocks that will spawn instability in financial markets.
Bernanke rejected those arguments last month when he delivered his semiannual economic report to Congress and at the moment he enjoys broad support inside the Fed for maintaining the Fed's current approach.That effort includes keeping a key short-term interest rate at a record low near zero until unemployment falls below 6.5 percent. The Fed is also buying $85 billion per month in Treasury bonds and mortgage-backed securities in an effort to keep downward pressure on long-term interest rates. The Fed will hold a two-day meeting next week and economists expect the central bank will keep its low interest rate policies unchanged. Gas prices rose sharply in February after falling at the end of 2012. The national average price for a gallon of gas jumped from $3.42 on Jan. 31 to $3.78 on Feb. 28. Since then, however, gas prices have come down a bit. They averaged $3.70 per gallon on Thursday, according to AAA's Daily Fuel Gauge Report.