By Harriet Torry and Sarah Chaney
WASHINGTON--U.S. consumer prices rose moderately in February, although at a slightly slower pace than in the prior month.
The consumer-price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after rising a seasonally adjusted 0.5% in January, the Labor Department said Tuesday.
Excluding the volatile food and energy categories, so-called core prices rose 0.2%, compared to 0.3% in January.
Economists surveyed by the Wall Street Journal expected consumer prices to rise 0.2% in February, and core prices to rise 0.2%.
In the year to February, overall prices rose 2.2%, the largest annual increase since November. Core prices were up 1.8% on the year. Economists expected a 2.3% increase in overall inflation and core prices to rise 1.9%.
Real average hourly earnings were flat in February and real average weekly earnings rose a seasonally adjusted 0.3% on the month.
Tuesday's report showed an index of energy prices rose 0.1% in February, as gasoline and fuel oil costs both fell. The price index for new vehicles declined for the second straight month, falling 0.5%. Apparel prices rose 1.5% on the month and transportation services increased 1%. Airline fares rose 0.6% on the month but were down 5.4% on the year, while the cost of wireless telephone services dropped 0.5% from January and are down 9.4% from February 2017.
The reading comes a week before Federal Reserve officials' next scheduled policy meeting in Washington. Financial markets place a very high likelihood on a quarter-percentage-point increase in short-term interest rates from their current range between 1.25% and 1.5% at the March 20-21 meeting. Ahead of Tuesday's release, fed-funds futures tracked by CME group show investors had priced it in with a 88.8% probability.
Fed policy makers have penciled in three rate increases this year, and have been monitoring the inflation picture closely, looking for signs that a tightening labor market and continued economic growth are generating stronger wage and price increases after years of weak inflation.
Tuesday's reading marked the third straight month in which core prices have risen at an annual rate of 1.8%, suggesting inflation is rising at a moderate pace.
Tuesday's report follows the Labor Department's February jobs report last week, which showed average hourly earnings for private-sector workers rose 2.6% in February from a year earlier, a slight pullback from the 2.8% annual wage gain in January.
Taken together, the reports suggest wage pressures remain relatively benign.
The Labor Department's report on consumer prices can be found at: http://www.bls.gov/news.release/pdf/cpi.pdf