U.S. consumer prices rise 0.6 percent in February
www.forbes.com Reuters, 03.21.03, 8:30 AM ET WASHINGTON (Reuters) - U.S. consumer prices posted their biggest gain more than two years in February as food costs rose and energy surged on the march to war with Iraq, the government said on Friday. The Consumer Price Index, the main U.S. inflation gauge, advanced 0.6 percent last month, the Labor Department said, outstripping the 0.5 percent increase expected by Wall Street economists. But outside those categories, prices were mostly well-contained, the report showed. Energy prices shot up 5.9 percent, the largest increase since June 2000 while food costs staged their biggest rise since June 1996, gaining 0.7 percent. The core CPI, which strips out volatile food and energy costs, increased just 0.1 percent, a bit less than the 0.2 percent economists had expected. While consumer prices have risen a strong 3.0 percent over the last 12 months, much of that reflects higher energy costs. The core CPI is up just 1.7 percent over that period, its smallest 12-month gain in nearly 37 years. Oil prices rose sharply through February after a now-ended workers' strike in Venezuela cut into supplies and as the United States prepared for war with Iraq. But in recent days, as war came to appear inevitable and as bombs ultimately began to drop, prices have reversed course, shedding a quarter of their value from recent highs. Crude oil futures were near a three-month low in European trade on Friday. The Labor Department's report showed a 9.9 percent increase in the price of gasoline, the largest monthly gain since June 2000, while the cost of fuel oil spiked up 15.8 percent, the sharpest increase since February of 2000. As for food, prices for beef and veal shot up 3.3 percent, the steepest increase since January 1984. Pork prices rose 1.1 percent, poultry gained 1.2 percent and vegetable prices rose 1.5 percent. Labor said there were no special factors to account for the jump in food costs. Federal Reserve policymakers believe inflation may be set to drift lower this year given a high degree of slack in the economy, minutes from a January rate-setting meeting released on Thursday showed. However, officials spoke about a number of "crosscurrents" in the inflation picture.