By Lucia Mutikani
WASHINGTON, March 11 (Reuters) - U.S. consumer prices picked up in February as the cost of gasoline increased in anticipation of an escalating war in the Middle East, and with the conflict driving up oil prices, a further rise in inflation is expected in March.
The Consumer Price Index rose 0.3% last month after gaining 0.2% in January, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the CPI climbing 0.3%. Gasoline prices
in the CPI report had declined for two straight months.
Prices at the pump have jumped by more than 18% to $3.54 per gallon since the U.S.-Israeli war on Iran started at the end of February, data from motorist advocacy group AAA showed.
Oil prices shot up well above $100 per barrel, before pulling back on Tuesday after President Donald Trump stated the war could end soon. The CPI also rose amid the continued, but staggered pass-through from Trump's sweeping tariffs, which he pursued under a law meant for use in national emergencies that have since been struck down by the U.S. Supreme Court.
In the 12 months through February, the CPI advanced 2.4% matching January's increase, and reflecting last year's high readings dropping out of the calculation.
The Federal Reserve tracks the Personal Consumption Expenditures price indexes for its 2% inflation target, and is expected to keep interest rates unchanged next week.
Though businesses have absorbed much of the import duties, economists said they were unlikely to continue doing so, citing among others persistently higher readings of input costs in the Institute for Supply Management surveys. Trump has responded to the Supreme Court ruling by imposing a 10% global tariff, which he said would rise to 15%.
Excluding the volatile food and energy components, the CPI gained 0.2% after rising 0.3% in January. The so-called core CPI inflation was curbed by a decline in used motor vehicle prices, as well as smaller increases in rents.
In the 12 months through February, the so-called core CPI inflation increased 2.5% after rising by the same margin in January, also reflecting favorable base effects.
Economists said the tame core CPI readings were unlikely to translate into moderate core PCE inflation gains in February because of different weights and unexpected strength in services prices in the January Producer Price Index report.
January's delayed PCE price index data due on Friday is expected to show a solid increase in core inflation. February's PCE inflation data will be released on April 9.
(Reporting by Lucia Mutikani; Editing by Aurora Ellis and Chizu Nomiyama)
