The American consumer price index was unchanged in February, the U.S. Labour Department reported Thursday.

The measure of the average change in prices of goods and services purchased by households was 0.2 per cent, compared with the month earlier.

Excluding food and energy prices, U.S. inflation rose 0.1 per cent in February, first decrease in 27 years. (Ben Margot/Associated Press)

The annual rate fell to a three-month low, from 2.6 per cent to 2.1 per cent. Gasoline prices dipped 1.4 per cent and food costs rose only a marginal 0.1 per cent.

The core rate of inflation — which strips out volatile food and energy prices — rose 0.1 per cent.

That was its first decrease in 27 years and brought the annual rate down three-10ths of a percentage point to 1.3 per cent, its lowest level since early 2004.

BMO Nesbitt Burns economist Sal Guatieri predicted in a commentary that the core rate — which is closely watched by the U.S. Federal Reserve in setting interest rates — will continue to fall.

"Although rising commodity prices might keep the headline rate [which includes food and energy] aloft," he said, "high unemployment and falling unit labour costs point to further disinflation in the core measure.

"The February CPI report supports the Fed's view that inflation 'is likely to be subdued for some time', which will weigh towards keeping policy rates on hold for a while even as the economy regains its footing," he said.