BBC News

US inflation rate hits 0.5% in February

image captionThe CPI measure is closely watched by the Federal Reserve as a measure of price momentum

US prices rose 0.5% in February compared with the previous month, as food and fuel prices continued to exert pressure on the economy.

The change, higher than the 0.4% seen in January, was the fastest monthly rate of increase in nearly two years.

The core rate of inflation, which strips out food and energy costs, rose by 0.2% - the same as in January.

Consumer Price Index inflation hit an annual 2.1%, up from 1.6% in the year to January, the Labor Department said.

Surge 'temporary'

Food price inflation was a key driver of the increase. Food costs went up by 0.6% month-on-month, the most in two-and-a-half years.

Petrol prices rose even faster, up 4.7%. But apart from those two categories, price rises were more muted.

The US Federal Reserve said earlier this week that it expected the current inflationary surge to be temporary, but that it would closely monitor developments.

"I don't think it means anything for the Fed," said Tom Porcelli, US economist at RBC Capital Markets in New York. "They're going to probably wind up saying some of this is transitory. It won't be sustained."

On Wednesday, US producer price figures for February showed a 1.6% increase, the biggest since June 2009. This rise in wholesale inflation was also fuelled largely by higher food and energy costs.