Inflation in February remained tame, with just a 0.4 percent seasonally adjusted increase in the consumer price index, according to government data released Wednesday.
When food and energy were excluded, prices rose just 0.1 percent, while gasoline prices spiked 6.4 percent as the price of oil rose.
Major categories including airline fares, used cars and trucks, and apparel saw prices drop. Over the past year, overall prices rose 1.7 percent.
The topic of inflation has been front and center in recent weeks as Democrats advanced a $1.9 trillion COVID-19 relief package through Congress. The House was expected to approve the measure Wednesday, and President Biden said he would sign it immediately.
Republicans have argued that the measure is too large and poorly targeted, saying the flood of cash will overheat the economy and spark inflation.
Bond markets have seen yields rise on the prospect of higher prices down the road, which in turn sent jitters through the stock market.
Cailin Birch, global economist at The Economist Intelligence Unit, said that oil prices remain a central risk to inflation, but noted that forecasts are still very much within bounds of the Federal Reserve’s 2 percent target.
“Overall, recent price growth fits with our forecast that overall inflation will average 1.9 percent in 2021, before picking up to 2.1 percent in 2022 as the U.S. economic recovery takes hold,” she said.
Wednesday’s report pushed stock markets up, with the Dow Jones Industrial Average rising over 200 points, or 0.8 percent in opening trading, and the Nasdaq composite increasing 131 points, or 1 percent.