This rate is above the tepid 0.9 percent initially reported for the fourth quarter but hardly a runaway economy number. Meanwhile, indexes of U.S. inflation have remained tame. The producer price index fell 0.2 percent in February. Prices of intermediate and crude goods fell 0.4 percent and 0.7 percent, respectively, with similar numbers being recorded with volatile food and energy components stripped out of the producer price index. Broadly, core producer prices rose at a 1 percent annual rate over the three months ending in February, down sharply from the 2 percent inflation rate over the past year.
Similar decelerations are evident at the intermediate and crude goods level.
Core CPI inflation, excluding more volatile food and energy prices, rose at a 2.5 percent annual rate during the three months ending in February, down from the 1995 average of 3 percent. The pattern that emerges from the behavior of U.S. interest rates last summer and this winter is similar. Whenever financial markets catch a whiff of economic growth above 2 percent, interest rates are pushed up by an amount that precludes continuation of 2 percent growth. Last July, signs of an economic pickup emerged that ultimately did lead to growth over 3 percent during the third quarter. Interest rates, however, were pushed up as inflation actually decelerated.