US core inflation unexpectedly cools on autos, drug prices

US core inflation unexpectedly cools on autos, drug prices

The broader consumer price index (CPI) rose 0.2 per cent from January, the first increase in four months, though the 1.5 per cent annual gain missed projections and was the smallest rise since 2016. This should make the FOMC comfortable with its recent decision to be patient on monetary policy, and await clearer signs on how slower global growth and weaker confidence shows up in domestic data in the months ahead.

It said that rate of retail inflation, as represented by Consumer Price Index (CPI) for the month of February was 2.57, as against 1.97 per cent in January.

The government will release February's retail inflation and January's industrial production (IIP) data around 5:30 pm today. Although all broad-based groups registered growth in January, barring mining (3.9 per cent), growth of manufacturing and electricity remained anaemic. A separate Labor Department report on Tuesday showed that average hourly earnings, adjusted for inflation, rose 1.9% in February from a year earlier. Food prices increased 0.4 percent, the biggest rise since May 2014, after gaining 0.2 percent in January.

Apparel prices rose 0.3 per cent. But still, 2.57 percent far lesser than the 5.07 per cent recorded in the same month past year. The CPI increased 1.6% on a year-on-year basis in January.

Prices of fruits (-4.62 per cent) and vegetables (- 7.69 per cent) continued to decline in February. But excluding food and fuel costs, the core CPI fell short of a forecasts, rising only 0.1 percent.

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"With nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures, the [Federal Open Market] Committee has adopted a patient, wait-and-see approach to considering any adjustment in the stance of policy", Fed Chairman Jerome Powell said during a speech in Stanford, Calif., last week.

But consumers got some relief from healthcare costs, which fell 0.2 percent after five straight monthly increases. Clothing prices plunged 1 percent in February, while new-auto prices slipped 0.2 percent.

But prices for new motor vehicles, used cars and trucks, as well as recreation fell.

This article is for general information purposes only.

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