US consumer prices up slightly in February

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The CPI report showed prices of new vehicles fell for the first time in four months while used-car prices dropped 0.7 percent from January, the biggest drop since September.

The low level of inflation also gives the Federal Reserve more flexibility in holding off on further increases to a key short-term interest rate, enabling the USA central bank to provide support for economic growth.

While retail inflation rose to a four-month high of 2.57 per cent during February, mainly due to higher food prices, it was still well below the RBI benchmark. The retail inflation in February 2018 was at 4.44 per cent.

The CPI inflation is expected to inch up in February as food prices hardened on a month-on-month basis. Gas prices for U.S. drivers were $2.31 a gallon on average in February, up from $2.25 in January, according to the U.S. Energy Information Administration.

Apparel prices rose 0.3 percent after surging 1.1 percent in January.

Excluding the volatile food and fuel categories, CPI slowed to 2.1 percent, after three months of 2.2 percent gains. That index tends to run slightly below the Labour Department's CPI, and January figures are due March 29.

The IIP number saw a steep fall from the 7.5 per cent growth recorded in January 2018. The central bank also changed its policy stance from "calibrated tightening" to "neutral".

Even on a month-on-month basis, the Index of Industrial Production (IIP) declined during the month under review from December 2018 when it stood at 2.60 per cent. Inflation expectations held by the public one year and three years from now fell, both to readings of 2.8% from 3% in January, the bank said Monday.

The public's inflation expectations fell in February, according to the Federal Reserve Bank of New York's latest Survey of Consumer Expectations. This marks the strongest inflation-adjusted wage growth since November 2015, an increase that would likely help consumer spending and economic growth. Food costs gained 0.4 percent, the biggest increase since 2014. A decline in core goods prices (-0.2% m/m) was the culprit behind the softness in core inflation. The cost of communication services was unchanged in February for a third straight month.

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