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Rising services costs lift U.S. producer prices in February

Reuters  |  WASHINGTON, March 14 

WASHINGTON, March 14 (Reuters) - U.S. prices increased slightly more than expected in February as a rise in the cost of services offset a decline in the price of goods.

The Labor Department said on Wednesday its price index for final demand rose 0.2 percent last month after increasing 0.4 percent in January.

That lifted the year-on-year increase in the to 2.8 percent in February from 2.7 percent in January. Economists polled by had forecast the gaining 0.1 percent last month and increasing 2.8 percent from a year ago.

A key gauge of underlying price pressures that excludes food, and rose 0.4 percent last month, matching January's gain. In the 12 months through February, the so-called core increased 2.7 percent. That was the biggest gain since August 2014 and followed a 2.5 percent advance in January.

The solid increase in underlying wholesale prices supports views that consumer inflation will pick up this year.

Economists believe that a tightening labor market, weak dollar and fiscal stimulus in the form of a $1.5 trillion tax cut package and increased government spending will push inflation toward the Federal Reserve's 2 percent target this year.

The U.S. central bank's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding and energy, has undershot its target since May 2012.

The Fed has forecast three interest rate increases this year, with the first hike expected at the March 20-21 meeting. Some economists expect that it will raise its projection to four rate increases this year.

Last month, the price of services increased 0.3 percent after a similar gain in January. Services were boosted by a rise in the cost of hotel accommodation, hospital inpatient care, and bundled wired

Prices for goods slipped 0.1 percent, the first drop since May 2017, after rising 0.7 percent in January. prices fell for a third straight month. Gasoline prices dropped 1.6 percent after surging 7.1 percent in January.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 18:17 IST
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