--Energy -0.2%: Fuel Oil -2.9%, Natural Gas -2.4%
--Food +0.5%: Meats Rise, Veggies +8.0%, Dairy Flat
--CPI +3.5% YOY, Core CPI +2.7% YOY
--Core Included Shelter +0.4%, Medical +0.5% in 2nd Month of Big Gains

By Joseph Plocek

WASHINGTON (MktNews) - The U.S. February CPI data show that the core rate of inflation, which perhaps was elevated in January due to the fact that many businesses post new prices at the start of the year, in fact continues to rise.
U.S. February CPI was up 0.3% overall, and core was also up 0.3% for a second month. The data show no indication that the January 0.3% burst in core was an aberration.
Core was boosted again in February by shelter at +0.4% (rents were rising and hotel costs were up 0.8%), medical at +0.5% (mainly in drugs) and apparel +0.8% at after three months of declines. A Labor Department economist said that the apparel spike might be related to the introduction of new spring/summer clothing lines. He implied the price rises might not hold.
The most worrisome of the price gains is the move in shelter, which has a "relative importance" or weight in the CPI of 30.25%. That is, a close look at the data shows that a key area of consumer costs is on the rise after being calm for years. And the rise is in rent and owners' equivalent rent, both of which were up 0.3%.
Core CPI was up 2.7% on a year-over-year basis through February.
The median estimates in a Market News International poll of economists was for CPI to be up 0.2% and for core also to be up 0.2%.
**Market News International Washington Bureau: (202) 371-2121**