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Inflation watch: Consumer prices up again

Consumer prices exceeded the Fed's expectations for inflation in February — doubling the January increase — but policymakers may well leave interest rates unchanged when they meet next week to avoid risking recession.

TEXT OF STORY

LISA NAPOLI: Consumer prices are up and more than economists expected. The 0.4 percent increase in the Consumer Price Index in February doubled the increase in January. Marketplace’s Hillary Wicai reports.


HILLARY WICAI: Blame higher energy and soaring food costs as this harsh winter’s effect on citrus crops is beginning to show.

Eating healthy isn’t leaving the pocketbook feeling so fit. The cost of fresh fruit alone jumped more than it has in 18.5 years.

Peter Morici is a professor of economics at the University of Maryland. He predicts Federal Reserve policymakers will leave interest rates unchanged when they meet next week mostly because there’s not much the Fed can do.

PETER MORICI: Quite simply the economy is already slowing because of the subprime problems and the broader problems in the housing market. Raising interest rates further at this point would serve no purpose to control inflation. If it raises rates it risks a recession. If it lowers rates it risks inflation.

Gasoline rose by 0.3 percent and it’s expected to go higher as traveling picks up in spring.

A separate survey shows the nationwide average for gasoline has risen 20 cents per gallon in just the past two months.

In Washington, I’m Hillary Wicai for Marketplace.

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