US consumer prices edge up In February, headline CPI gained 0.4 per cent as the cost of petrol continued to climb, while core CPI rose 0.1 per cent. Lower inflation would give the US Federal Reserve room to keep interest rates near zero to spur the economic recovery and boost employment. The Fed has said further monetary easing may only be needed if growth is slower than expected, arguing that a range of policy rules suggested keeping interest rates close to zero until as late as 2015. Even as petrol prices have declined in recent weeks, gasoline lifted March's energy index, which rose 0.9 per cent, but the increase was milder than February's 3.2 per cent surge. Petrol rose 1.7 per cent after a 6 per cent jump the month before, while electricity prices fell 0.8 per cent, the most since June. The indices for housing, used cars and trucks accounted for about half the total increase for all items minus food and energy. Today's consumer price index release for March is good news, as it shows continued, modest increases in both the CPI and the core index . . . What you don't want to see after three years of Fed credit easing is falling indices or disinflation threatening to turn to deflation. That would tell you that something is seriously wrong or broken here in the US. But today's numbers are consistent with continued, modest expansion in the US economy," said James Kee, president and chief economist of South Texas Money Management. On Thursday the producer price index, which measures the average change in prices received by domestic producers of goods and services, was unexpectedly soft. Economists surveyed by Bloomberg had expected a 0.3 per cent rise, but the core PPI, which strips out food and energy costs, posted a 0.3 per cent rise, following a gain of 0.2 per cent in February. In a separate release of data on Friday, the University of Michigan's consumer sentiment index for April fell to 75.7 compared with a rise in March to its best level since the financial downturn, at 76.2. The survey questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment, which is directly related to the strength of consumer spending, is likely to have been affected by disappointing payroll and jobless claims reports. But the sentiment index's expectations component was upbeat, rising 2.7 points to 72.5 for its best reading of the recovery. This suggests that consumers believe the current disappointment will be short-lived, also reflecting the decline in petrol prices. In spite of some of the positive feeling among economists, investors were not convinced, with markets performing poorly in early trading.