WASHINGTON — 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.
The increase appeared to ease many economists’ concerns about dangerous price movements in either direction. The recession is expected to dampen any inflation pressures for at least the rest of this year, while the slight uptick in prices over the past two months also has made the possibility of deflation more remote.
The Labor Department reported Wednesday that consumer inflation rose 0.4 percent in February, the biggest one-month jump since a 0.7 percent rise in July. Two- thirds of last month’s increase, which was slightly more than analysts expected, reflected a big jump in gasoline prices at the pump.
Core inflation, which excludes food and energy, was 0.2 percent in February, also slightly higher than the 0.1 percent economists expected.
The Federal Reserve, meanwhile, said Wednesday that it would spend up to $300 billion to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt.
Fed policymakers also said there is “some risk that inflation could persist for a time below rates that best foster economic growth and price stability.”
Falling prices may sound good to consumers but can actually make a recession worse by dragging down Americans’ wages and clobbering already- stricken home and stock prices.
Falling prices already are hurting businesses’ profits, forcing them to slice capital investments and lay off workers.
“Consumer inflation in the first two months of the year is starting to look more normal than the extremely depressed numbers” late last year, said Michael Feroli, an economist at JPMorgan Economics.
Separately, the deficit in the broadest measure of U.S. trade fell sharply in the final three months of last year.
