US consumer prices up because of higher gas costs

WASHINGTON (AP) — A sharp jump in gas prices drove a measure of U.S. consumer costs up in February. But outside higher pump prices, inflation stayed mild.

The Labor Department said Friday that the consumer price index rose 0.4 percent in February, the largest increase in 10 months. Gas prices rose 6 percent to account for most of the gain.

Food prices were unchanged for the first time in 19 months. And excluding food and energy, so-called "core" prices rose just 0.1 percent.

Mild inflation allows the Fed to maintain its low interest-rate policy.

"Not much to stew about on the inflation front," Robert Kavcic, an economist at BMO Capital Markets, wrote in a note to clients.

Most economists expect inflation to remain in check this year. The prices of agricultural commodities such as corn and cotton have come down. And while more Americans are working, few are getting big pay raises. That has limited retailers' ability to charge more.

In the past 12 months, consumer prices have risen 2.9 percent, the same year-over-year change as last month. Core prices have increased 2.2 percent over the same period. That's lower than January's year-over-year figure.

Still, gas prices keep rising. The jump at the pump could slow growth if consumers are forced to cut back on other purchases. The average price for a gallon of gas on Friday was $3.83, according to AAA. That's 32 cents higher than a month ago.

The Fed noted the increase Tuesday after its one-day policy meeting. Fed policymakers said they expect rising energy prices to temporarily boost inflation but longer-term inflation should remain stable. The Fed also reiterated its plan to keep its short-term interest rates near zero until at least 2014.

Consumers are seeing relief elsewhere.

Grocery store prices appear to be leveling off after increasing for most of the past two years. Consumers paid less last month for vegetables, dairy products, and meat, fish and eggs.

Clothing costs dropped by the most in more than five years in February and airfares dipped.

And natural gas prices dropped sharply last month and have declined nearly 10 percent in the past year. That offset some of the increase in gas costs. Mild winter weather has cut demand, at the same time that supplies have risen as companies extract more natural gas from shale rock.

But other items cost more. Consumers paid more for prescription drugs, hotel rooms, and new cars. Rental costs rose 0.2 percent for the fourth straight month.

A separate report from the Labor Department showed that average hourly pay, adjusted for inflation, fell 1.1 percent in the 12 months ended in February.

A report Wednesday indicated that inflation pressures also aren't increasing much at the wholesale level. The producer price index, which measures price changes before they reach the consumer, rose 0.4 percent. The gain was largely because of higher gas prices. Excluding food and gas, core wholesale prices rose just 0.2 percent

A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.

Lower price growth also leaves more money in consumers' pockets, boosting their buying power and supporting economic growth. The jump in gas and food prices early last year limited Americans' ability to buy other goods, slowing the economy.

  • Treasure trove of British newsreels reveals Top Gear's ancestors 3 hours ago
    Treasure trove of British newsreels reveals Top Gear's ancestors

    Long after television grew to dominate American and British homes, newsreel producer British Pathé kept at it, documenting the news of the day until finally ceasing production of new short films in 1970 after 60 years of effort. Last week, all of British Pathé's 85,000 films were put online — including dozens of fascinating, rare and often weird car films that resemble nothing so much as a jet-age Top Gear.

  • Nissan tests self-cleaning paint that could make car washes obsolete 5 hours ago
    Nissan tests self-cleaning paint that could make car washes obsolete

    During this vile, never-ending winter, motorists had three options to keep their cars clean: Shell out on regular car washes; slave away in the cold, wind and snow washing it yourself, or screw it and just drive a dirty car. I, like many, chose the last option. But if only I'd been able to test Nissan's self-cleaning car, all my troubles would have washed away.

  • Popular hot yoga myths debunked 11 hours ago
    Popular hot yoga myths debunked

    What’s the hottest new workout taking the world by storm? That would be hot yoga, also known as Bikram yoga. Conducted in a heated room with sweltering temperatures of about 40°C (or approximately 104° Fahrenheit) and 40 per cent humidity, … Continue reading →

  • Photo of a very thin Lee Kuan Yew sparks concern
    Photo of a very thin Lee Kuan Yew sparks concern

    A new picture of Singapore's first prime minister, Lee Kuan Yew, who is now 90 years old, has drawn concern from people on Singapore's internet space.

  • Waste oil collector struggles after STOMP posts, receives help from kind souls
    Waste oil collector struggles after STOMP posts, receives help from kind souls

    After being photographed at work in Jurong pooling used oil near coffee shops, 50-year-old Valerie Sim has been struggling to keep her family afloat. Web portals STOMP and The Real Singapore published pictures of her in February, triggering a witch hunt for others like her and comments from readers like “Who knows if they’ll use it as cooking oil?” Some readers also said they filed police reports against her and other people they believed were doing the same thing she was.

  • I tendered my resignation without securing the next job. Here’s why I don’t mind.
    I tendered my resignation without securing the next job. Here’s why I don’t mind.

    I have committed a taboo – I have tendered my resignation without securing the next job. The reactions to the announcement were varied but they all pretty much hint at a deep sense of disapproval. “Why did you do that?” It was as if I had renounced my faith. “What are you going to do from now on?” Almost as though a misfortune had incapacitated me. “What does your family have to say about it?” As if I had offered to cook for the next family dinner. I was, and still am, certain of my reasons and motivations for the resignation. However the response I received got me thinking about why people are so concerned about the gaps in their careers. The developed world evolved from an agricultural economy to an industrial economy to the service age, then to the knowledge economy in the late 1990s and 2000s marked by breakthroughs in technological innovations and competition for innovation with new products and processes that develop from the research community. According to The Work Foundation, the knowledge economy is driven by the demand for higher value added goods and services created by more sophisticated, more discerning, and better educated consumers and ... The post I tendered my resignation without securing the next job. Here’s why I don’t mind. appeared first on Vulcan Post.