US consumer prices rose at their fastest pace in more than one and a half years in February, driven by higher food and energy prices.
The Labour Department said its Consumer Price Index rose 0.5 per cent, the largest gain since June 2009, after increasing 0.4 percent in January. Core CPI – excluding food and energy – rose 0.2 per cent after advancing by the same amount in January.
Though the increase in core CPI was a touch above economists' expectations for a 0.1 per cent gain, it suggested that surging costs for energy and other commodities, which have been hitting producers and consumers alike, had yet to generate the type of broad inflation that would spur the Federal Reserve to respond.
The Fed said on Tuesday it expected the upward price pressure from commodities to be temporary but it would closely monitor inflation and inflation expectations.
"I don't think it means anything for the Fed. They're going to probably wind up saying some of this is transitory. It won't be sustained," said Tom Porcelli, U.S. economist at RBC Capital Markets in New York.