February CPI inflation rises 0.2%, lower than expected

March 12 (UPI) -- February inflation measured by the Consumer Price Index Wednesday was 2.8% annually and was up a lower than expected 0.2% for the month, seasonally adjusted.

"The index for shelter rose 0.3% in February, accounting for nearly half of the monthly all items increase," the Bureau of Labor Statistics said in a statement. "The shelter increase was partially offset by a 4.0% decrease in the index for airline fares and a 1.0% percent decline in the index for gasoline."

As gasoline prices declined, electricity and natural gas prices rose. Food prices were up 0.2% in February.

Egg prices were up 10.4% in February. Beef was up 2.4%.

With energy and food excluded, core CPI inflation for February rose 0.2% and was 3.1% annually, according to the BLS.

The Dow Jones economist consensus expectation was for 0.3% increases in headline and core CPI. Those Dow-surveyed economists expected annual inflation rates of 2.9% and 3.2% excluding food and energy.

CPI inflation for February overall was 0.1% lower than expected.

The BLS CPI report Wednesday said vehicle insurance was up 0.3% in February for an annual increase of 11.1%.

"The all items index rose 2.8% for the 12 months ending February, after rising 3.0% over the 12 months ending January. The all items less food and energy index rose 3.1%t over the last 12 months. The energy index decreased 0.2% for the 12 months ending February. The food index increased 2.6% over the last year."

The cost of air travel and the cost of new vehicles were both lower in February.

With U.S. tariffs on Canada, Mexico and China and broad levies on steel and aluminum imports triggering retaliation and continuing to roil markets, the market expectation is that the Federal Reserve may still cut interest rates again in May.

"While the Fed is still likely to remain on hold at this month's meeting, the combination of easing inflationary pressures and rising downside risks to growth suggest that the Fed is moving closer to continuing its easing cycle," Goldman Sachs Asset Management's Kay Haigh told CNBC.