As the Federal Reserve Board of Governors were meeting in Washington to plot their next move on the economy came news Wednesday from the Labor Department that consumer prices rose 0.4% in February, a sign that the much feared prospect of deflation had not materialized.

On an unadjusted basis, the Consumer Price Index for all urban consumers was up 0.5% during the month. The rise was driven by the energy index, which rose 3.3%, itself driven by the gasoline index, which was up 8.3% in February. The index for all items less food and energy rose 0.2% in February, the same as in January.

On a non-seasonally adjusted basis, the CPI-U was up 0.2% year-over-year in February, well within the range the Fed considers consistent with its dual role of promoting growth while keeping inflation in check.

The food index turned down slightly in February, falling 0.1%.The food at home index fell 0.4% with five of the six major grocery store food group indexes posting declines. The index for all items less food and energy rose 0.2 %, the same increase as in January. The indices for new vehicles (+0.8%) and apparel (+1.3%) increased substantially in February, and the indexes for rent and owners¹ equivalent rent increased slightly (both +0.1%).

The housing index was virtually unchanged in February for the third straight month but up 1.9% from the same month a year ago on an unadjusted basis.