WASHINGTON—
Consumer prices in the United States fell slightly from January to February but remain high, posing a challenge for the Federal Reserve at a delicate time for the financial system.
The government reported on Tuesday that consumer prices rose 0.4% last month, just below January’s 0.5% rise. However, basic prices, which include more volatile items such as food and fuel, rose 0.5% in February and 0.4% in January. The Federal Reserve generally focuses its attention on the base number as an indicator of inflation pressures.
While prices are rising faster than the Fed would like, some economists expect the central bank to pause interest rate hikes at its next meeting next week. For now, given the collapse of two banks since Friday and resulting concerns about the situation of other regional banks, the central bank will likely prefer to boost confidence in the financial system rather than focus on fighting inflation.
That’s a significant change from a week ago, when central bank chief Jerome Powell suggested to a Senate panel that the Fed could raise its key interest rate by half a percentage point if inflation didn’t ease. When the central bank increases this interest rate, interest rates on mortgages, auto loans, credit cards and business loans generally rise.
Compared to the situation a year ago, inflation has fallen for eight months in a row. In February, consumer prices rose 6% year-on-year, less than the 6.4% increase recorded between January last year and January this year, and well below the 9.1% recorded in June. However, inflation is still well above the central bank’s target of 2% per year. Base prices rose 5.5% annually in February, down slightly from January’s 5.6%.
Inflationary pressures continue to impact large parts of the economy. Rents, supermarket prices, and the cost of hotels, restaurants and airfares have risen as Americans continue to search for housing, travel, eat out and attend entertainment events.
