Little Change in U.S. Consumer Prices in February

Business and Finance Career - The price of consumer goods held steady in February, the government reported Thursday, the latest sign that near-zero interest rates and billions of dollars in stimulus money had yet to trigger inflation.

Prices showed no movement over all, but when volatile food and fuel costs were excluded, prices rose a slight 0.1 percent, according to the Labor Department.

A 0.7 percent jump in the price of used cars and trucks was offset by a 0.5 percent decline in energy costs. Food prices climbed 0.1 percent. Compared with the month a year ago, consumer prices have increased 2.1 percent. The results were in line with expectations.

“Simply put, inflationary pressures remain few and far between, a not-surprising development given the slack in the economy, underutilization in manufacturing capacity and weakness in the labor market,” Dan Greenhaus, chief economic strategist for Miller Tabak, wrote in a research note.

A separate report by the Labor Department released Thursday offered signs of improvement in the labor market. The number of people filing first-time unemployment claims last week fell by 5,000 to 457,000, in line with expectations.

The trend for producer prices, which often predict shifts in consumer prices as businesses pass on costs, are similar. On Wednesday, the Labor Department said wholesale prices fell 0.6 percent in February, and were virtually unchanged when food and fuel were excluded.

Policy makers are carefully watching changes in prices as they work to revive the economy. The Federal Reserve has begun scaling back some of is extraordinary interventions, such as snapping up troubled mortgage-backed securities.

But on Tuesday, facing an economy that was still grappling with pervasive unemployment and a sputtering housing market, the Fed said the country was not ready for an increase in the benchmark federal funds rate. The central bank pledged to keep rates low for an “extended period.”

Thursday’s report will probably give policy makers reason to prolong low interest rates for at least the next six months. Some economists believe, however, that the economy may not be able to withstand an increase in interest rates for another one to two years.