Inflation Hovers Near 2%

(CNN) -- The annual inflation rate is hovering near 2%.

The Consumer Price Index, the government's key measure of inflation, showed prices rose 0.7% in February, according to the Bureau of Labor Statistics. Year-over-year, inflation was up 2%.

Economists often like to strip out food and gas prices, which both tend to be volatile, to get a more accurate reading on inflation. That measure, called core CPI, was also up 2% over a year ago.

The Federal Reserve usually attempts to keep inflation around the 2% level, but recently has intensified its focus on healing the job market.

"The increase will jangle some nerves at the Fed, but policymakers will remain focused on ensuring the economic upturn looks sustainable and robust before worrying too much about inflation," said Chris Williamson, Market chief economist.

Since December, the central bank has said it will probably not back away from its stimulative policies until inflation exceeds 2.5% a year or the unemployment rate falls to 6.5%.

When it measures inflation, the Fed uses another measure that comes from the Commerce Department. That showed prices were up only 1.2% year-over-year as of January.


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