The cost of living of the Americans, excluding fuel and food, surged more than projected in February, suggesting broad-based gains that assisted in keeping a floor under inflation.
A Labor Department report, which was released on Tuesday in Washington, showed that the US core consumer-price index jumped 0.2 percent for a second month.
Several economists have made forecasts of a 0.1 percent surge in the core consumer-price index. The prices overall also jumped 0.2 percent with the stabilization of fuel costs. This was the first advance in four months.
An improving labor market is contributing in underpinning the consumer confidence, giving American firms a little more power for pricing.
The members of the policy making Federal Open Market Committee of the Federal Reserve Bank are looking for inflation in order to accelerate and close in on their two percent target as they mulls the right time for their first raise in interest rates since 2006.
Jacob Oubina, a senior US economist at New York-based RBC Capital Markets LLC, said, “You’re going to see some floor built into prices. For the Federal Reserve, the report will give them confidence that headline inflation will be about two percent in the medium-term, which is all they want at this point.”
The stock-index futures held earlier gains following the release of the labor department report, while the yields on the US Treasury securities were little transformed.
The Standard & Poor’s 500 Index’s contract, which is maturing in June this year, increased 0.1 percent to 2,096.6 at 8:45 am in New York. The US Treasury securities yield was 1.89 percent on the benchmark 10-year note in comparison to 1.91 percent late on Monday.