Newspaper article THE JOURNAL RECORD

Consumer Inflation Rises 09.3 Percent for February

Newspaper article THE JOURNAL RECORD

Consumer Inflation Rises 09.3 Percent for February

Article excerpt

WASHINGTON (AP) _ Higher costs for food, education and airline fares combined to push consumer inflation up by 0.3 percent in February.

The Labor Department reported that the February increase in its Consumer Price Index matched a similar 0.3 percent gain in January and left inflation so far this year running at an annual rate of 3.7 percent, a full percentage point above the 2.7 percent rate in both 1994 and 1993.

The government blamed the February price pressures on rising costs for food and a variety of other products, which offset the first drop in gasoline prices in four months.

Also Thursday, a report on housing showed that construction of new homes and apartments dropped by 2.6 percent in February following an even sharper 12 percent decline in January. The consecutive monthly decreases, the first since early 1993, pushed housing starts down to an annual rate of 1.32 million units, the lowest level in a year.

Analysts also pointed to a monthly survey done by the Federal Reserve Bank in Philadelphia showing that the business outlook in March dropped sharply to its lowest level since August 1993 as weakness was seen in new orders, shipments, employment and hours worked.

Even though the Philadelphia survey only reflects conditions in one region of the country, economists said it was significant, especially combined with other statistics pointing to slower growth. Another report Thursday showed that jobless claims rose by 5,000 last week to 343,000, the first time claims have risen for two straight weeks since early October.

Economists said that U.S. markets are growing more convinced that the American economy, after a breakneck pace last year, was slowing to a more sustainable level that will keep inflation in check.

If they are right, that would mean that the Federal Reserve's seven interest rates increases since February 1994 have achieved its hoped-for soft landing for the economy, and the central bank will not be forced to tighten credit further. …

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