US Inflation Rate Tops Forecasts for a Second Month

The US inflation rate picked up in February, as prices for petrol and housing pushed higher.

According to the Labor Department, he annual rate, which measures the pace of price increases, was 3.2% in February, up from 3.1% in January.

Airfare, car insurance and clothing were among the items driving the increase over the month.

Grocery prices, which have jumped in recent years, fuelling public discontent, were unchanged.

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The monthly report comes during a critical presidential election year and as the The Federal Reserve is debating the next step in its fight to rein in prices.Inflation has slowed significantly since the Fed started hiking borrowing costs sharply in 2022 and the central bank is expected to start reversing course and cutting interest rates sometime this year.

However, calls for the first cut to come as soon as March have been revised as recent inflation readings show progress stalling, with many now expecting its first move in June or later.

Analysts said the figures were affected by seasonal price adjustments tied to the start of the year, but that the overall report was likely to reinforce the Fed’s determination to remain cautious.

The US economy has so far held up better than expected in the face of inflation and higher borrowing costs, but persistent price rises have hampered President Joe Biden’s ability to sell his policies to voters and could pose risks to the economy in the months ahead.

The Labor Department said petrol prices rose by 3.8% between January and February, while airline fares rose 3.6%.

Grocery prices showed little change over the month, as higher prices for items such as cereal, bread and eggs were offset by lower meat and fresh fruit costs.

Overall, grocery prices were 1% higher than a year earlier.

Housing costs rose 0.4% over the month and 5.7% from February 2023.