US inflation Rises Unexpectedly to 3.2%

U.S. inflation rose again in February, which will keep the Federal Reserve on track to wait until at least the summer before starting to cut interest rates.

The Consumer Price Index (CPI) rose 0.4% during the month and 3.2% from a year ago, the Labor Department's Bureau of Labor Statistics reported Tuesday. The monthly increase was in line with expectations, but the annual rate was slightly higher than Dow Jones' forecast of 3.1%.

Excluding volatile food and energy prices, the core CPI rose 0.4% month-on-month and rose 3.8% year-on-year. Both were a tenth of a percentage point higher than expected.

While the 12-month pace is far from the peak of inflation in mid-2022, it remains well above the Fed's 2% target.

The 2.3% increase in energy costs helped boost the headline inflation figure. Food costs were flat during the month, while housing costs rose another 0.4%. Data indicated that increases in energy and housing amounted to more than 60% of the total increase.

Markets showed little initial reaction after the news broke, with futures tied to major stock averages and Treasury yields also rising slightly.