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Consumer Prices Flat in Feb.
Lack of increase means Fed has an open door to a big rate cute next week
By Jim O'Neill
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Posted Mar 14, 08 8:41 AM CDT
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(Newser)
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Consumer prices were flat for February, pleasantly surprising economists who expected a 0.2% increase, reports the Wall Street Journal. This morning’s consumer price index eases concerns that inflation is accelerating as the economy slows, and it gives the Federal Reserve more reason to float a large interest rate cut next week. A drop in energy prices was credited with the inflation relief, likely to be short-lived as this month's record oil and gas prices are factored into the next reports.
But other sectors, including health care, clothing, and housing were also holding steady, which should give the Fed breathing room. The core consumer price index—which excludes food and energy prices—was also unchanged, according to the Labor Department. It was the first time since November, 2006, that the measure didn’t increase. Overall, consumer prices rose 4% from a year ago; the core CPI was up 2.3% over the previous year.