U.S. inflation rate inches up to 2.2% in February

U.S. consumer prices increased at a modest pace in February, underscoring that inflation pressures appear to be muted for now.
America's inflation rate inched higher last month, partly because of an increase in the cost of apparel. (Simon Dawson/Bloomberg)

Consumer prices increased at a modest pace in February, underscoring that inflation pressures appear to be muted for now.

The Labor Department says the consumer price index increased 0.2 per cent last month, after a sharp 0.5 per cent gain in January. Core prices — which exclude the volatile food and energy categories — also climbed 0.2 per cent. Overall consumer prices rose 2.2 per cent in February from a year earlier, while core prices rose 1.8 per cent from a year ago for the third straight month.

Inflation fears have intensified this year after a report last month suggested wages were rising more quickly, which can push up prices. Subsequent data have shown that hourly pay gains remain moderate. Sluggish pay increases have helped keep Inflation dormant for most of the past decade.

Gas prices and the cost of hospital services declined, but apparel prices and car insurance rates spiked, which ticked the overall rate higher, Bank of Montreal economist Robert Kavcic noted.

"All in, a largely as expected February inflation report that likely isn't going to move the market or Fed expectations much, but some upside lies ahead for the core inflation rate," he said.

With files from CBC News