March 16, 2013 in Business

Gas prices push inflation upward

Associated Press
 

WASHINGTON – A spike in gas prices drove a measure of U.S. consumer costs up in February by the most in more than three years. But outside the gain in fuel costs, inflation was mostly modest.

The consumer price index increased a seasonally adjusted 0.7 percent last month from January, the Labor Department said Friday. It was the biggest monthly rise since June 2009.

Still, three-fourths of the increase in the index reflected a 9.1 percent surge in gas prices. That was also the largest monthly gain since June 2009. Gas prices had fallen in the previous four months. Since last month’s increase, gas prices have started to decline again.

For the 12 months that ended in February, prices increased 2.0 percent. That’s in line with the Federal Reserve’s inflation target.

Excluding volatile food and energy costs, core inflation rose just 0.2 percent in February. Over the past 12 months, core prices have risen just 2 percent.

Low inflation leaves consumers with more money to spend, which benefits the economy. It also allows the Federal Reserve leeway to keep interest rates low to help spur economic growth.

In February, total energy costs rose 5.4 percent. In addition to gasoline, prices for natural gas and home heating oil also showed big gains.

Food prices grew just 0.1 percent. Prices for fruits and vegetables jumped 1.4 percent. Meat, poultry and fish prices increased 0.5 percent. Most other food prices declined.

Prices for new cars fell 0.3 percent, the largest monthly decline in three years. Airline fares and clothing prices also fell. Monthly rents and used car prices increased.

Gas prices rose sharply in February after falling at the end of 2012. The national average price for a gallon of gas jumped from $3.42 on Jan. 31 to $3.78 on Feb. 28.

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