Feb consumer prices flat on lower energy

WASHINGTON (Reuters) - Cheaper energy and transportation prices helped keep overall consumer prices in check in February, the Labor Department said on Friday, a surprise after a period of run-ups that had heightened concern about inflation.

The department said its Consumer Price Index, the most widely used gauge of inflation, was flat last month after rising 0.4 percent in January. Even more significantly, core consumer prices that exclude food and energy items were unchanged in February after climbing 0.3 percent a month earlier.

The tame price performance was sharply in contrast to Wall Street economists' forecasts that overall prices would climb by 0.3 percent and that core prices would be up 0.2 percent. Federal Reserve policy-makers meet next Tuesday and are expected to cut interest rates again to try to boost a flagging economy.

The last time overall consumer prices were unchanged was in August 2007.

The CPI report showed energy prices fell 0.5 percent in February, a sharp reversal from January's 0.7 percent gain and the first decline since last August. Transportation prices were down 0.7 percent following a 0.5 percent December gain.

In the 12-month period through February, consumer prices rose 4 percent, a moderation from the 4.3 percent gain registered in January and the smallest year-over-year increase since last October, according to department officials.

(Reporting by Glenn Somerville, editing by Joanne Morrison)

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