Inflation Slows Sharply in February

By MARTIN CRUTSINGER Posted 16 March 2006 @ 02:44 pm EET     Print     Reprint     E-Mail     Comments

WASHINGTON (AP) - Inflation slowed sharply in February as food costs moderated and the price of gasoline, natural gas and other energy products posted big declines.

The Labor Department reported Thursday that its closely watched Consumer Price Index posted a tiny 0.1 percent increase last month after having jumped 0.7 percent in January. The slowdown in price pressures was certain to be welcomed at the Federal Reserve, which has been boosting interest rates since June 2004 to make sure inflation does not get out of control.

In other economic news, the number of Americans filing claims for unemployment benefits edged up to 309,000 last week, an increase of 5,000 from the previous week. Even with the slight increase, analysts said the level of claims was still signaling a strong labor market.

The third consecutive rise in jobless claims pushed them to the highest point in 11 weeks. However, analysts said they still remain at a level that shows the labor market has rebounded from the blows delivered last year by the Gulf Coast hurricanes and surging energy prices.

The government reported last week that 243,000 new jobs were created in February, the strongest gain in three months, as hiring picked up around the country. Analysts are forecasting similar strong job gains in coming months.

In a third report, the Commerce Department said that construction of new homes and apartments declined by 7.9 percent in February to a seasonally adjusted annual rate of 2.12 million units, another sign that the nation's five-year housing boom is slowing.

Analysts had expected the February slowdown after housing had surged to the fastest pace in more than three decades in January, reflecting unusually warm weather during the month.

The CPI report showed that energy prices dipped by 1.2 percent last month after a big 5 percent increase in January. The moderation reflected a 1 percent drop in gasoline pump prices, a 2.8 percent fall in home heating oil costs and a 4.5 percent drop in the price of natural gas, which was the biggest decline in more than four years.