Consumer prices edged up in February, an early indication that U.S. inflation may be picking up after falling oil prices pushed it into negative territory over the past few months.
The Bureau of Labor Statistics reported Tuesday that its Consumer Price Index rose 0.2 percent in February, adjusting for seasonal fluctuations, right in line with investors’ expectations.
Over the 12 months ending in February, there was no change in prices. The year ending in January had seen slight deflation of -0.1 percent.
February’s uptick in inflation came as energy prices rose slightly for the first time in months. Gasoline rose 2.4 percent, after falling by roughly a third over the course of the year.
Core inflation, a less-volatile gauge of inflation that strips out energy and food prices, was up more than expected on an annual basis at 1.7 percent, up from 1.6 percent the month before.
Prices decline during the early months of 2015 amid falling energy prices and a strengthening dollar.
The price of a barrel of Brent Crude oil has roughly fallen in half, from as high as $110 last summer to $55 in recent days.
Investors and U.S. officials have attributed the steep drop in energy prices to slowing growth overseas, including Europe and China.
That same development, coupled with the European Central Bank’s plans to start a year-long, trillion-dollar-plus bond-buying campaign, has led to a sharp appreciation in the dollar. Since last summer, the Euro has gone from $1.40 to near parity in recent weeks.
The strong dollar has yielded cheaper imports for the U.S., a factor weighing down on consumer prices.
Low inflation has complicated the Federal Reserve’s plans for tightening monetary policy. Some officials at the central bank have questioned whether the Fed can raise short-term rates from zero, where it has held them since 2008, amid low and falling inflation, with some market measures of inflation expectations also slipping.
Tuesday’s news lends evidence to Fed chairwoman Janet Yellen’s guidance that inflation will pick up toward the Fed’s target as unemployment continues to fall and the temporary effects of falling oil prices pass through. At 5.5 percent in February, the unemployment rate is nearing the level that the Fed sees as consistent with a healthy economy.
February’s price increases were broad-based, the Bureau of Labor Statistics said, with increases in the prices of shelter and food as well as energy.
The energy index was up 1 percent in the month, after seven straight declines.
