Core consumer prices in the U.S., which excludes fuel and food, rose more than expected in the month of February, adding to evidence that inflation is inching closer to the Federal Reserve’s target. Lower gas prices reduced the overall cost of living.
Figures from the Labor Department showed that the core measure jumped 0.3% from the previous month, mimicking results from January. Back-to-back gains of 0.3% haven’t been seen in 15 years.
The consumer-price index, overall, fell 0.2%, which was in line with economists’ median forecast.
A stronger dollar and falling fuel prices subdued inflation in 2015. Federal Reserve policy makers noted in the past that the drag would be temporary. Policy makers are meeting this week to consider whether to raise interest rates further after the initial hike in December.
Estimates for the consumer price index were broad and varied, ranging from a decline of 0.5% to a gain of 0.3%.
A separate report on Wednesday showed a higher-than-expected increase in housing starts in February. Data also showed the highest numbers for new single family homes in over eight years. Commerce Department figures showed 1.18 million home starts (annualized rate) in February, a 5.2% increase from January.
The consumer price gauge was up 1% over 12 months ended in February. A 1.4% advance year-over-year was seen in January.
The core measure, which excludes food and fuel, inched up 2.3% from February of last year.
Analysts were expecting the core gauge to rise 0.2% compared to the previous month.
Energy costs were down 6% from January, according to the report. Food prices rose 0.2%.
Gains in the core measure were broad-based, with increases seen in hotel rates, rents, medical care, clothing, education and cars. Apparel prices jumped 1.6%, the highest rise in 7 years.
Federal Reserve policy makers are due to issue a statement on Wednesday. Economists predict that the Fed will leave rates unchanged, but future hikes may be on the table this year.