Washington, DC, Mar. 17--Consumer prices rose by a modest 0.3 percent in February as high energy costs continued to hit the pocketbooks of drivers filling up at the pump and people heating their homes.
The increase in the Consumer Price Index, the government's most closely watched inflation measure, however, marked a slowdown from the 0.5 percent jump registered in January, the Labor Department reported Wednesday.
Excluding energy and food costs, core consumer prices rose by just 0.2 percent in February for the second month in a row. That suggested the prices for many goods and services were fairly stable.
Federal Reserve Chairman Alan Greenspan and his colleagues said inflation is not a problem for the economy. That's one of the main reason why Fed policy-makers have leeway to hold short-term interest rates at a 45-year low of one percent, as they did on Tuesday.
"With inflation quite low and resource use slack, the committee believes that it can be patient in removing its policy accommodation," the Fed said. Some private economists viewed that language, along with the Fed's concerns about slow job growth, as meaning Fed policy-makers may not move to raise rates until 2005. Short-term rates have been at one percent since June.
The 0.3 percent increase in the CPI in February matched economists' forecasts. The 0.2 percent rise in core prices was slightly bigger than the 0.1 percent increase they were calling for.
Energy prices went up by 1.7 percent in February. While that marked a slowdown from the big 4.7 percent rise reported for January, there is little doubt that consumers continue to feel the sting of higher energy bills.
Gasoline prices increased by 2.5 percent, natural gas prices were up by 2.2 percent, fuel oil prices rose 1.1 percent and electricity prices edged up 0.2 percent last month.
Strong global demand and tight supplies have pushed energy prices up. Looking ahead, some analysts foresee higher prices at the gasoline pumps this summer.
Food prices, meanwhile, increased by 0.2 percent in February, after being flat in January. Rising prices for fruits and vegetables outweighed falling prices for beef and veal, pork, poultry and dairy products last month.
Elsewhere in the report, airfares rose 1.2 percent and new car prices rose 0.4 percent in February.
Costs for doctors' services jumped by 1.1 percent in February--the largest increase since May 1993. Prices for college tuition and fees increased by 0.5 percent in February. Rising costs for medical services and for education have been fairly constant sore spots for consumers.
Clothing prices, however, dipped by 0.1 percent, computer prices dropped by 1.2 percent and lodging costs fell by 1.6 percent in February, offering some relief to peoples' wallets.
