12:54 PM EDT, 03/12/2024 (MT Newswires) -- US consumer inflation accelerated in February, suggesting that the Federal Reserve will likely keep its policy rate on hold until it sees further signs of price growth trending lower.

The consumer price index advanced 0.4% sequentially last month, the Bureau of Labor Statistics reported Tuesday, matching the consensus compiled by Bloomberg. In January, consumer prices gained 0.3%. Annually, inflation accelerated to 3.2% from 3.1% in January, which was the Street's view for February.

"For a Fed that has become increasingly data dependent, this morning's numbers are unlikely to give policymakers much further conviction that inflation remains on a sustained downward path to 2%," TD Economics Senior Economist Thomas Feltmate said. "With the economy still strong, Fed officials can afford to keep rates elevated into the summer and continue to wait for further signs of cooling on the inflation front before dialing back the policy rate."

Core inflation, which excludes the volatile food and energy components, rose 0.4% in February, unchanged from the month prior. The figure modeled by analysts in the Bloomberg poll was for a 0.3% increase. On an annual basis, core inflation slowed down to 3.8% from 3.9% in January, but higher than the 3.7% market view.

Markets widely expect the central bank's Federal Open Market Committee to keep its rates unchanged on March 20, according to the CME FedWatch Tool. Expectations for a May cut were at 17% on Tuesday while markets see a 57% probability for an interest rate reduction in June.

"Clearly, restrictive monetary policy has not yet fully done its work and a patient and slightly hawkish Fed must remain in place for the monetary medicine to fully take effect," according to BMO Capital Markets Chief US Economist Scott Anderson.

Monthly food prices were flat last month. Energy prices rebounded sequentially to a 2.3% increase from a 0.9% decline, "largely driven by an uptick in gasoline prices," according to Feltmate. Annual food prices rose 2.2% last month, while the energy measure fell 1.9%, the official data showed.

Growth in shelter costs came down to a pace of 0.4% from January's 0.6% rise, while transportation services' prices climbed 1.4%, the BLS reported.