Stock futures turned positive after data showed that U.S. consumer inflation

Mar.14, 2008 in Market Outlook

Stock futures turned positive after data showed that U.S. consumer inflation
moderated in February, opening the door for the Federal Reserve to keep cutting
interest rates.

WASHINGTON (MarketWatch) — Led by a quirky decline in energy costs, U.S. consumer inflation moderated in February, opening the door for the Federal Reserve to keep cutting interest rates to support flagging economic growth.

This was the lowest core rate since November 2006.
Energy prices decreased 0.5% in February, the biggest drop since last August. Economists said gasoline prices dropped at the beginning of the month when the government survey was conducted but then prices jumped as the month progressed.
As a result, the improvement in February in prices may be short-lived.
Apparel prices fell 0.3% in February. Apparel has been on a upward trend in recent months.
Prices charged for medical care, always a source of higher prices because of low competition, increased a slim 0.1%.
In the past year, the CPI has risen 4.0%, down from a 4.3% gain in January. The core CPI has risen 2.3%, down from the 2.5% reading in the previous month.

Fed officials have said that they have been concerned that inflation has been running faster than they would like. But the majority of policymakers have indicated that the downward risks to the economy are greater than the risk of rising prices. They also expect inflation to cool as the economy continues to slow.
Most analysts expect the Fed to lower interest rates by a half a percentage point when policymakers meet next week.
Real weekly earnings rose 0.3% in February, the government said in a separate report.
More CPI details

Transportation costs decreased 0.7%. Airline fares fell 0.3%. New car prices fell 0.3%.
Drug prices gained 0.1% in February. Shelter costs were flat, the lowest reading since September 2005.

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