Inflation up for third straight month

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Prices paid by U.S. consumers for food, energy and other goods and services jumped again in February for the third straight month, adding to inflation fears.

The Labor Department reported that its inflation index increased 0.5% in February, driven by higher energy costs caused by the turmoil in the Middle East. Food prices also continued to move upward, with sharp increases in the costs of fresh vegetables and meats causing a 0.8% jump in the food index, the largest since July 2008.

The rise in overall inflation, following increases of 0.4% in December and January, means that consumer prices have gone up 2.1% over the previous 12 months. The 12-month inflation rate was just 1.1% in November.

Energy prices have been the main driver of higher costs. The Labor Department’s index of energy prices was up 3.4% in February and 9.8% over the last three months. Overall, the energy price index was up 11% in the last year.

A broader measure of inflation, which excludes volatile energy and food prices, rose less sharply last month, just 0.2%. For the previous 12 months, that core inflation rate is up 1.1%, which is well below the Federal Reserve’s target of 2%.

Separately, the Labor Department reported that new jobless claims dropped last week by 16,000 to 385,000. Those claims have been trending downward in recent weeks, helping reduce the unemployment rate to 8.9% in February.

-- Jim Puzzanghera