U.S. Economy: U.S. Consumer Prices Increase More Than Forecast

By Bob Willis and Timothy R. Homan

March 18 (Bloomberg) -- The cost of living in the U.S. increased more than forecast in February, reducing concern of a deflationary spiral that might push the nation toward a depression.

The consumer price index climbed 0.4 percent after a 0.3 percent rise in January, the Labor Department said today in Washington. Excluding food and fuel, the so-called core rate advanced 0.2 percent. The gains pushed the annual core inflation rate up to 1.8 percent, within the range that most Federal Reserve officials, meeting today, say is their objective.

Today’s figures reduce the odds of a prolonged price slide that has stirred concern among officials including St. Louis Fed President James Bullard. At the same time, inflation will probably stay subdued, analysts said; last month’s rise was spurred in part by car and clothing gains that may slow as consumers restrain spending.

“It brings some relief to the Fed, they are exactly in the middle of their comfort zone,” said Harm Bandholz, a U.S. economist at UniCredit Group in New York, who correctly forecast the rise in the core rate.

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