CPI Rises 0.3%, Giving Economy Mixed Signals
Inflation can not only push up overall operating costs for trucking companies, but if overall U.S. inflation rates are rising too fast, it will inhibit the Federal Reserve from cutting interest rates more aggressively to bolster the ailing economy.
That, in turn, would delay a return to strong growth in freight shipments that trucking companies need after months of weak freight demand.
The consumer price index -- the main gauge of U.S. inflation -- rose 0.3% in February, following a big 0.6% jump the month before, the Labor Department reported.
Analysts had been expecting only a 0.2% rise in both the overall and core CPI.
For the first two months of this year, consumer prices have risen at an annual rate of 5.6%, compared with a 3.4% increase for all of last year. The pickup mostly reflects higher energy prices, the Associated Press reported.
Following Tuesday’s half-percentage-point cut in U.S. interest rates by the Fed, which disappointed investors who were hoping for a more aggressive move, Wednesday’s CPI report offered mixed news for the economy.
The report showed smaller price increases than in January, which reinforces the belief that the Fed can be less worried about inflation and cut rates more in the future.
However, many economists viewed the beginning-of-the-year CPI jump as a onetime fluke, and therefore had expected a sharper deceleration in February inflation as their 0.2% estimates showed, Reuters reported.
National Association of Manufacturers President Jerry Jasinowski said in a statement that the Fed’s decision to lower rates on Tuesday was a “very helpful step toward bringing the economy out of troubled waters.”
Jasinowski also called on Congress to reduce income taxes as soon as possible to help speed the economic recovery.
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