WASHINGTON – The Labor Department reports on February consumer prices Tuesday at 8:30 a.m. Eastern.
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PRICES REBOUND: Economists forecast that the consumer price index rose 0.2 percent in February, according to a survey by data firm FactSet. That would be the first increase after three straight declines. Prices fell 0.7 percent in January, the most in six years.
Cheaper gas pushed the monthly changes into negative territory. The strong dollar is also holding down inflation by making imported products cheaper.
But prices at the pump have risen in the last month. As a result, overall energy costs are expected to have increased for the first time in eight months.
Excluding the volatile energy and food categories, economists expect core prices edged up 0.1 percent in February.
In the 12 months ending in January, the consumer price index dropped 0.1 percent, the first annual decline in five years. Core prices rose, however, by 1.6 percent.
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FED'S LIFE MORE DIFFICULT: Sharply lower gas prices are a good deal for drivers, but they have complicated the Federal Reserve's decision on when to raise the short-term interest rate it controls.
Job growth has been robust and the economy is expanding at a steady, if moderate, pace. Typically, that would lead the Fed to raise the rate from near zero, where it has been pinned since December 2008.
But the core price measure is below the Fed's target rate of 2 percent, which it has chosen because it provides a cushion against deflation. That argues for postponing a rate increase.
Last week, after a two-day meeting, Fed policymakers said in a statement that it may be appropriate to raise rates after "further improvement in the labor market" and when they are "reasonably confident that inflation will move back to its 2 percent objective over the medium term."
That statement caused many analysts to push back their estimate of when the Fed will move until September or later. Some economists still expect the first rate increase will happen in June.
Gas prices plummeted 60 percent from June through January, falling to a five-year low of $2.03 a gallon on average nationwide, according to AAA. But it rebounded to $2.33 by late February.
Some other trends are also keeping prices from falling. Rental apartment vacancies fell to their lowest level in 25 years at the end of last year, according to Joseph Carson, U.S. economist for asset manager AllianceBernstein. That pushed up average rents 3.4 percent in 2014, the biggest gain in six years. That upward move is lifting core inflation.