Consumer prices continued to rise in February, once again driven by strong growth in energy prices. The Consumer Price Index (CPI) for All Urban Consumers, released today by the Bureau of Labor Statistics (BLS), rose 0.5% (SA) in February—its eighth consecutive increase. Over the last 12 months, the all items index is up 2.1% (NSA).

Energy prices again were the main driver of the increase, with the energy index up 3.4% in February. Gasoline (+4.7%), fuel oil (+5.8%) and natural gas (+3.4%) all contributed to the strong growth in the energy index. The energy index has risen 9.8% over the last three months and is up 11% from a year earlier.  Food prices rose 0.6% for the month and were up 2.3% from a year earlier. Core CPI which excludes the volatile food and energy prices rose a modest 0.2% in February.  Year-over-year, core CPI is up a moderate 1.1%.

Housing’s component of the CPI, the shelter index, rose 0.1% in February, maintaining steady rate of growth (albeit modest) that began in October 2010. The rental component, rent and owner’s equivalent rent, also rose 0.1%. Over the last 12 months, the shelter index has increased 0.8% and the rental index is up 1.1%.

Modest growth in the rent index in recent months coincides with a steady decline in rental vacancy rates in the second half of 2010.  Despite the recent declines, rental vacancy rates still remain high at 9.4% in the fourth quarter of 2010.

NAHB expects the CPI for All Urban Consumers to jump 2.9% in the first quarter of 2011, due to the recent energy driven gains in the CPI.  However, energy price increases are considered to have peaked.  The all item index is expected to settle back to moderate growth over the remained of 2011, with an overall gain of 1.8% for the year. Inflation will remain moderate through 2012, with an annual rate of growth of 1.4%.