Consumer prices rose 0.2 percent in February, in line with expectations and likely alleviating concerns that inflation is about to accelerate, according to the Labor Department.
On a year-over-year basis, the consumer price index rose 2.2 percent, a bit ahead of the 2.1 percent increase reported in January.
Excluding volatile food and energy prices, the CPI was up 0.2 percent for the month and 1.8 percent annualized.
The release comes a month after the consumer price index posted its biggest gain in four years of 0.5 percent. That jump helped fuel inflation scares and contributed to a quick correction in the stock market that saw major indexes fall more than 10 percent.
Markets reacted quickly to both months’ data, but in opposite ways. In January, the jump in CPI prompted an aggressive selloff in stocks amid interest rate fears. Tuesday’s release of February numbers, however, pushed hopes higher, with a 100-point gain in the Down industrials indicated when trading starts.
Energy prices were the biggest contributor to February’s gains, with the index measuring the sector up 7.7 percent overall, pushed by a 20.7 percent surge in fuel oil, according to unadjusted numbers.
Investors are watching the inflation numbers closely for clues on how quickly the Federal Reserve will raise interest rates this year. Markets currently agree with Fed projections for three hikes, though a more aggressive inflation move could trigger additional increases.
March is a near certainty for a rate move, with traders assigning a 31 percent chance of a fourth increase in December, according to the CME.
Consumer prices likely rose 0.2 percent in February after a 0.5 percent gain in January, according to economists polled by Thomson Reuters.
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