U.S. consumer price inflation was tame in February, the Labor Department reported Thursday, boosting expectations that the Federal Reserve would soon put an end to its interest rate increases The consumer price index rose 0.1% in February, as falling prices for energy, food and clothing offset higher prices for medical care, shelter and air fares. The increase matched Wall Street's expectations The core CPI, meanwhile, increased 0.1%, a tick lower than the 0.2% gain expected by economists polled by MarketWatch. The CPI has risen 3.6% in the past 12 months, down from 4% last month. The core rate is up 2.1% year-over-year, the same as in January In the past three months, the CPI has risen at a 2.7% annual rate, while core prices are rising at a 2% pace. The report isn't likely to dissuade the Federal Reserve from raising its overnight lending rate by a quarter percentage point to 4.75% on March 28, but it could give Fed officials reason to believe that they have contained inflation pressures, thus forestalling further rate hikes. The Fed's preferred gauge of inflation - the core personal consumption expenditure price index - will be released by the Commerce Department on March 31 Financial markets and analysts alike expect the Federal Open Market Committee to raise rates to 5% by the May meeting Monetary policy works with long lags, meaning that the impact of higher rates in March wouldn't be felt in the economy until 2007 In a separate report, the Commerce Department said housing starts slowed as expected in February to a 2.12 million annual pace from a 32-year high in January. In a separate report, the Labor Department said real hourly earnings (adjusted for inflation) increased 0.3% in February. In the past 12 months, both real hourly earnings and real weekly earnings are down 0.1%. The Labor Department also said first-time applications for unemployment benefits rose by 5,000 last week to 309,000, the highest this year. Continuing claims fell by 49,000 to 2.45 million, the lowest in five years. In February, energy prices dropped 1.2%. Gasoline prices fell 1%, while natural gas prices sank 4.5% after a record-setting increase in January. Energy prices are up 20.1% in the past 12 months Food prices rose 0.1%