Fuel, food push prices higher
Consumer Price Index up a bit more than forecast but the 'core' reading is in line with forecasts.
NEW YORK (CNNMoney.com) -- Higher gasoline and food prices pushed the cost of consumer goods up in February, according to a government report that showed inflation pressures roughly in line with Wall Street forecasts.
The Consumer Price Index, the government's main inflation gauge, climbed 0.4 percent in February, after a 0.2 percent rise in January. Economists surveyed by Briefing.com had forecast a rise of 0.3 percent.
Energy prices jumped 0.9 percent following a 1.5 percent drop in January, while food prices gained 0.8 percent.
The more closely watched core CPI, which strips out volatile food and energy prices, rose 0.2 percent, in line with average forecasts on Wall Street and down a bit from the 0.3 percent increase in January.
The inflation reading comes ahead of next week's meeting of the Federal Reserve, with most analysts expecting the central bank to again hold interest rates steady.
The Fed has been struggling with a slowing economy on the one hand, which could lead the central bank to cut short-term rates, and stubborn inflation pressures on the other, which could lead to more rate hikes.
"The Fed is not out of the woods with respect to inflation, so despite slowing growth, expect another hold from policymakers next week," said Wachovia economist Gina Martin.
The report showed a 2.7 percent rise in core CPI compared to a year earlier. That's the same 12-month gain posted in the January report.
It's generally believed that the Fed wants to see core inflation in the range of a 1 to 2 percent increase, although generally the Fed is looking at other inflation gauges that tend to run lower than core CPI.
Overall, consumer prices were up 2.4 percent last month from a year earlier, due mainly to a 1 percent drop in energy prices compared to a year ago.
That puts wage gains well ahead of price increases over the past 12 months. A separate Labor Department report shows the average hourly wage up 4.1 percent over the 12 months ending in February.
Friday's report follows a reading Thursday that shows a much bigger jump in inflation at the wholesale level. But that report, the Producer Price Index, is generally seen as more volatile than the CPI reading.