Price cool: USA consumer prices cool in February

Retail inflation climbs to 2.57%, factory output decelerates to 1.7%

The consumer price index (CPI) increased 0.2%, lifted by gains in the costs of food, fuel and rents. This should make the FOMC comfortable with its recent decision to be patient on monetary policy, and await clearer signs on how slower global growth and weaker confidence shows up in domestic data in the months ahead.

Retail inflation jumped to a four-month high of 2.57 per cent in February due to costlier food articles, according to official data released Tuesday. The retail inflation in February 2018 was at 4.44 per cent.

As per the data, the output rate of the manufacturing sector output growth rate slowed to 1.3 per cent in January from a year-on-year rise of 8.7 per cent. The headline CPI was up 1.5% from a year ago, and the core CPI was up 2.1% versus a year ago.

Excluding the volatile food and energy components, the CPI edged up 0.1%, the smallest increase since August 2018. Owners-equivalent rent, one of the categories created to track rental prices, rose 0.3%, as did rent of primary residence.

On Tuesday, February's CPI data will be released.

Additionally, among the six use-based classification groups, the output of primary goods, which has the highest weightage of 34.04, rose by just 1.4 per cent. The core inflation is expected to be steady around 5.4 percent last month as compared to 5.38 percent a month before.

The Fed has a 2 percent target for a separate inflation gauge from the Commerce Department that's linked to consumer spending. The CPI had been unchanged for three straight months.

US 30-year bond yields were slightly down at 3.031 percent, from 3.032 percent on Monday.

In a wide-ranging interview with CBS's 60 Minutes television news program, Fed Chairman Jerome Powell on Sunday reiterated the central bank's wait-and-see approach to further monetary policy tightening this year. Food costs gained 0.4 percent, the biggest increase since 2014. "The weaker print can be traced to a drop in core goods prices, which fell 0.2%". Clothing prices plunged 1 percent in February, while new-auto prices slipped 0.2 percent. Consumers paid more for motor vehicle insurance, airline fares, household furnishings and personal care products.

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