US consumer prices rose marginally in February, but the lack of inflation pressures will probably not dissuade the Federal Reserve from dialing back its monetary stimulus.

The Labor Department said on Tuesday its Consumer Price Index nudged up 0.1 per cent as a decline in gasoline prices offset an increase in the cost of food.

The CPI had ticked up 0.1 per cent in January and last month’s gain was in line with economists’ expectations.

In the 12 months through February, consumer prices increased 1.1 per cent, slowing from a 1.6 per cent rise in January. The February increase was the smallest rise since October last year.

Stripping out the volatile energy and food components, the so-called core CPI also rose 0.1 per cent for a third straight month. In the 12 months through February, core CPI rose 1.6 per cent after rising by the same margin in January.

Consumer inflation is running below the Fed’s 2 per cent target, which suggests interest rates will probably remain near record low levels even as the central bank cuts back on the amount of money it is injecting into the economy each month.

With job growth accelerating and industrial production and consumer spending strengthening, economists expect the Fed to announce another $10 billion reduction to its monthly bond purchases when policymakers end a two-day meeting on Wednesday.

Last month, food prices rose 0.4 per cent, the largest increase since September 2011. That accounted for more than half of the increase in the CPI last month.

There were big increases in the prices of meat, fish, poultry, eggs, vegetables and fruits.

Gasoline prices declined for a second month, helping to offset sharp gains in the price of heating oil and natural gas.

Within the core CPI, a 0.2 per cent rise in the cost of shelter was the major contributor for the rise in the index. There were also increases in medical care, recreation and new vehicle prices. Prices for tobacco, used cars and trucks, apparel and household furnishings and operations fell.

Reuters