Como se combate o populismo? "Com eleições", responde Fukuyama

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8:29am 03/23/05 U.S. FEB. REAL EARNINGS FALL 0.4%
8:29am 03/23/05 U.S. FEB. CPI HOUSING COSTS UP 0.4%
8:29am 03/23/05 U.S. FEB. CPI MEDICAL CARE PRICES UP 0.6%
8:29am 03/23/05 U.S. FEB. CPI ENERGY PRICES UP 2%
8:29am 03/23/05 U.S. CORE CPI UP 2.4% Y-O-Y, MOST SINCE AUG. 2002
8:29am 03/23/05 U.S. CPI UP 3% YEAR-OVER-YEAR

ECONOMIC REPORT: Consumer prices churn higher; Feb. CPI up 0.4% on energy, housing, medical costs
By Rex Nutting, MarketWatch
Last Update: 9:16 AM ET March 23, 2005

WASHINGTON (MarketWatch) - U.S. inflation broke higher in February.

The U.S. consumer price index increased a seasonally adjusted 0.4 percent, led by soaring energy costs and higher prices for housing, medical care and air fares, the Labor Department reported Wednesday.

Excluding food and energy prices, the core rate of inflation increased 0.3 percent in February.

The increases in the CPI and core CPI were each 0.1 percentage point stronger than expected by Wall Street economists surveyed by MarketWatch.

The CPI is up 3 percent in the past year, while the core rate has risen 2.4 percent, the biggest gain since August 2002. The core rate had risen 0.2 percent for four months in a row before February's upside surprise.

The figures, coming a day after the Federal Reserve warned of budding inflationary pressures, depressed both stock and bond markets on Wednesday. Stock futures fell and the yield on the 10-year Treasury briefly spiked to 4.69 percent on the news. The yield on the 2-year note rose briefly to a 3-year high.

"We would point out, however, that the unrounded month-to-month change in the February core CPI was 0.251 percent," said Joshua Shapiro, chief economist for MFR Inc. "Therefore, markets are having heart attacks about a difference of 0.02 percent."

"While the upside to February figures were slight, the adverse impact will be magnified by yesterday's FOMC statement regarding inflationary pressures, as well as expectations that March headline CPI will be considerably boosted by the rise in gas prices - which should be up big, perhaps as large as October's 8 percent increase," said Mat Johnson, chief economist for ThinkEquity Partners.

The Federal Open Market Committee said Tuesday that inflationary pressures could be contained only by "measured" increases in interest rates. The FOMC hiked the federal funds rate to 2.75 percent, and hinted that more, maybe many more, rate hikes are yet to come.

"We are left in all this wonder what the Fed is up to and what it is waiting for?" said Robert Brusca, chief economist for FAO Economics, arguing that the FOMC ought to be more aggressive in battling inflation.

With the inflation rate at 0.4 percent and hourly pay and average workweek both unchanged, real weekly earnings fell 0.4 percent in February. Real earnings (adjusted for inflation) have fallen 0.8 percent in the past year.

Price increases were widespread in February. Only apparel and recreation prices bucked the upward trend.

Commodity prices increased 0.4 percent, while services prices increased 0.3 percent.

Energy prices rose 2 percent in February, as gasoline prices increased 3.2 percent. Natural gas prices climbed 2.5 percent and fuel oil prices increased 2.4 percent. Energy prices had fallen the two previous months, but are now up 10.4 percent in the past 12 months.

Food prices rose a moderate 0.1 percent in February.

Housing costs, which represent 40 percent of the CPI, increased 0.4 percent, the most since March 2003. A 1.1 percent increase in lodging away from home led the increase, likely a seasonal quirk due to the relatively late Super Bowl. Costs for homeownership and renting a home each increased 0.2 percent.

Medical care prices rose 0.6 percent, with 0.7 percent increases in hospital services and physician services.

Transportation costs increased 0.8 percent, largely the result of higher energy costs. Air fares gained 1.5 percent, the most since July 2003. Prices of new vehicles increased 0.1 percent.

Apparel and recreation prices each declined 0.2 percent.