The road ahead is far from smooth, with sluggish profits and weak export demand

Ken Goldstein

Consumer prices rose by 0.2% in February, taking the year-on-year rate to 1.1%.

The rise was in line with analyst expectations, but stock markets reacted negatively to the news.

The US Federal Reserve hinted on Tuesday that the current interest rate of 1.75% - the lowest level in 40 years - could be pushed higher later this year.

Greenspan cheer

The Fed's chairman, Alan Greenspan, dropped a 15-month-old warning that weakness posed the biggest threat to the economy.

Monthly price rises

Clothing +0.5% Airlines +1% Medical care +0.3% Food +0.2% Energy -0.8%

The central banker balances the economy's strength against the risk of inflation when making interest rate decisions.

The Dow Jones index of leading shares fell almost 150 points before recovering somewhat to close 22 points down at 10,450.

Similar fears over interest rate rises had pushed the index 135 points lower the previous day.

Rocky road

Also on Thursday, the Conference Board said its index of leading US economic indicators was flat in February, but maintained that the US economy is nonetheless "firmly in recovery."

The index had previously been rising for the past four months.

And some economists have already questioned how fast and deeply the US economy will recover.

"The road ahead is far from smooth, with sluggish profits and weak export demand restraining growth," Conference Board economist Ken Goldstein warned.