US consumer prices rebound, underlying inflation firming

A shopper has his receipt checked before leaving a Best Buy store in Westbury, New York.
Shannon Stapleton | Reuters

U.S. consumer prices rebounded in February as gasoline prices rose for the first time since June, and there were also signs of an uptick in underlying inflation pressures, which could keep a June interest rate increase on the table.

The Labor Department said on Tuesday its Consumer Price Index increased 0.2 percent last month after declining 0.7 percent in January. That ended three straight months of declines in the index.

In the 12 months through February, the CPI was unchanged after slipping 0.1 percent in January. Economists polled by Reuters had expected the CPI to rise 0.2 percent from January and slip 0.1 percent from a year ago.

Federal Reserve officials have long viewed the energy-driven weakness in inflation as transitory. The U.S. central bank, which has a 2 percent inflation target, has kept its short-term interest rate near zero since December 2008.

Fed Chair Janet Yellen said last week policymakers could raise interest rates when they had "seen further improvement in the labor market" and were "reasonably confident that inflation will move back to its 2 percent objective over the medium term."

The so-called core CPI, which strips out food and energy costs, increased 0.2 percent in February after a similar gain in January. In the 12 months through February, the core CPI rose 1.7 percent, the largest increase since November.

Crude oil prices fell 60 percent between June and January on fears of a global oil glut and the refusal of Saudi Arabia and other OPEC members to cut output. In February, Brent stabilized at around $60 and U.S. crude at around $50.

Last month, domestic gasoline prices rose 2.4 percent, the largest increase since December 2013, after tumbling 18.7 percent in January. Gasoline prices had declined for seven straight months.

Food prices increased 0.2 percent. Elsewhere, shelter costs increased 0.2 percent, accounting for about two-thirds of the increase in the core CPI. Shelter costs had advanced 0.3 percent in January.

Apparel prices rose 0.3 percent in February after a similar gain in January. There were also increases in airfares, new motor vehicle and used cars and trucks prices. However, the cost of medical care services declined for the first time since 1975.