Washington——

U.S. consumer prices recovered last month, a sign that inflation remains an ongoing challenge for the Federal Reserve and President Joe Biden’s reelection campaign, both of which are counting on a steady easing of price pressures this year.

The U.S. Department of Labor said on Tuesday that prices rose 0.4% from January to February, up from 0.3% the previous month. Compared with the same period last year, consumer prices rose by 3.2% last month, higher than the annual rate of 3.1% in January.

Excluding volatile food and energy prices, so-called “core” prices also rose 0.4% from January to February, matching last month’s gains and faster than the Fed’s 2% target. Core inflation is watched particularly closely because it often provides a better idea of ​​where inflation is likely to go.

Rising natural gas prices have pushed up overall inflation, with gasoline prices rising 3.8% from January to February alone. However, grocery prices were unchanged last month, rising just 1% from the same period last year. The cost of clothing, used cars and rent also increased in February, pushing up inflation.

Despite the rise in February’s data, most economists expect inflation to continue falling slowly this year. At the same time, last month’s rise may underscore the Fed’s caution about cutting interest rates.

Headline inflation has fallen sharply from a peak of 9.1% in June 2022, but is now slowing more slowly than last spring and summer. Prices for some goods, from appliances to furniture to used cars, are falling after supply chain congestion caused prices to spike during the pandemic. There are more new cars at dealerships and more electronics on store shelves.

By contrast, prices for dental care, auto repairs and other services are still rising faster than before the pandemic. Car insurance prices are soaring, reflecting rising repair and replacement costs. After significantly raising wages for nurses and other urgently needed workers, hospitals are passing on higher wage costs to patients in the form of higher prices.

Voters’ views on inflation are sure to take center stage in this year’s presidential election. Despite a healthy job market and record-high stocks, polls show many Americans blame Biden for a surge in consumer prices that began in 2021. Although inflationary pressures have eased significantly, average prices remain well above where they were three years ago.

In his State of the Union address last week, Biden highlighted steps he has taken to reduce costs, such as capping insulin prices for Medicare patients. The president also criticized many large companies for engaging in “price gouging” and so-called “deflationary inflation,” in which companies reduce the quantity of a product in a package rather than raising the price.

“Too many companies are raising prices to increase profits, charging more and more for less and less,” Biden said.

Federal Reserve Chairman Jerome Powell said in congressional testimony last week that the central bank is getting closer to cutting interest rates. After the January meeting, Fed officials said in a statement that they needed “greater confidence” that inflation was steadily falling toward their 2% target. Since then, several Fed policymakers have said they believe prices will continue to fall. One reason, they believe, is that consumers are increasingly resisting higher prices by looking for cheaper alternatives.

Most economists expect the Fed’s first rate cut to occur in June, although May is also possible. When the Fed lowers its benchmark interest rate, it lowers borrowing costs for mortgages, auto loans, credit cards and business loans over time.

A still-healthy economy is one factor that could lead to higher inflation. Although most economists expected a recession last year, hiring and growth were strong and healthy. The Atlanta branch of the Federal Reserve said the economy grew 2.5% last year and is likely to grow at about the same pace in the first three months of this year.

Last week, the Labor Department said employers added a strong 275,000 jobs in February, the latest in a string of strong hiring gains that kept the unemployment rate below 4% for the 25th straight month. It’s the longest streak since the 1960s.

Still, the unemployment rate rose to 3.9% from 3.7% and wage growth slowed. Both trends could make the Fed more confident that the economy is cooling, which could help keep inflation down and lead the central bank to start cutting interest rates.