Consumer prices rose in February by the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades. Despite the February blip, the recession was expected to dampen any inflation pressures for at least the rest of this year.
The Labor Department reported today that consumer inflation rose 0.4% in February, the biggest one-month jump since a 0.7% rise in July. Two-thirds of last month’s increase, which was slightly more than analysts expected, reflected a big jump in gasoline pump prices.
Meanwhile, the deficit in the broadest measure of U.S. trade fell sharply in 2008 for the second consecutive year, due partly to a larger surplus in services trade. Economists expect the improvement in the U.S. current account to continue this year, but mostly due to rapid falls in imports as the recession cuts into domestic consumers’ buying power. Exports also are falling as the global economy slows, eliminating what had been a crucial source of sales for U.S. manufacturers early last year.
Core inflation, which excludes food and energy, rose 0.2% in February, also slightly higher than the 0.1% rise economists expected.
