The Consumer Price Index for All Urban Consumers (CPI-U) increase 0.5 percent in February, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The February level of 203.499 (1982-84=100) was 2.4 percent higher than in February 2006.
Food increased .8% -- the highest move in a year. It increased .7% in January. The compounded annual 3-month food index is 6.1%. In other words, agricultural price spikes noted yesterday are starting to bleed through to consumer prices.
CBS Marketwatch noted:
Food prices jumped for the second straight month, rising 0.8% -- the largest gain in nearly two years. Prices for fresh fruit rose 5.7%, the most in 19 years, while fresh vegetable prices also rose by 5.7%. Read the full government report.
Cold weather in California has damaged some crops, sending prices higher. Corn -- a primary input for many food items -- has also increased in price as more of the crop gets earmarked for ethanol production.
Energy prices increased .9% and their compound 3-month growth rate is 14.9%. In other words, the more volatile elements of the index are rising pretty fast right now.
The unadjusted 12-month rate is 2.4% -- .4% above the Fed's comfort zone.
Here's how Bloomberg reported this news:
Prices paid by U.S. consumers rose 0.4 percent last month, paced by gains in fuel, food and medical care that highlight Federal Reserve concerns over inflation.
The increase in the consumer price index followed a 0.2 percent January rise, the Labor Department said today in Washington. Core prices, which exclude food and energy, rose 0.2 percent and were 2.7 percent higher than a year earlier.
Combined with last month's jump in wholesale prices, the figures make it tougher for the Fed to lower rates should the mortgage crisis cause the economy to stumble. Policy makers are forecast to leave their benchmark interest rate unchanged for a sixth time when they meet next week.
``Inflation is running faster than the Fed would like it to run,'' Michael Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report. ``They believe it will fall gradually on its own as economic growth eases and they'll be patient in reacting to the numbers.''