CPI up 0.4% in February

The U.S. consumer price index increased a seasonally adjusted 0.4%, led by soaring energy costs and higher prices for housing, medical care, and air fares, the Labor Department reported Wednesday.

Excluding food and energy prices, the core rate of inflation increased 0.3% in February.

The increases in the CPI and core CPI were each 0.1 percentage point stronger than expected by Wall Street economists surveyed by MarketWatch.

The CPI is up 3% in the past year, while the core rate has risen 2.4%, the biggest gain since August 2002. The core rate had risen 0.2% for four months in a row before February’s upside surprise.

In a separate report, the National Association of Realtors said existing home sales remained healthy in February at a 6.79 million annual rate.

The overshoot in the core CPI was a main concern, following the Fed’s optimistic assessment that higher energy prices had not yet fed into core consumer prices, MarketWatch reports.

With the inflation rate at 0.4% and hourly pay and average workweek both unchanged, real weekly earnings fell 0.4% in February, the Labor Department said in a separate release. Real earnings (adjusted for inflation) have fallen 0.8% in the past year.

Commodity prices increased 0.4%, while services prices increased 0.3%.

Energy prices rose 2% in February, as gasoline prices increased 3.2%. Natural gas prices climbed 2.5% and fuel oil prices increased 2.4%. Energy prices had fallen the two previous months, but are now up 10.4% in the past 12 months.

Food prices rose a moderate 0.1% in February.

Housing costs, which represent 40 percent of the CPI, increased 0.4%, the most since March 2003. A 1.1% increase in lodging away from home led the increase, likely a seasonal quirk due to the relatively late Super Bowl. Costs for homeownership and renting a home each increased 0.2%.

Medical care prices rose 0.6%, with 0.7% increases in hospital services and physician services.

Transportation costs increased 0.8%, largely the result of higher energy costs. Air fares gained 1.5%, the most since July 2003. Prices of new vehicles increased 0.1%.

Apparel and recreation prices each declined 0.2%.