While Canadian inflation was bubbling up in February, U.S. core inflation measures remain tame. On Friday, The U.S. Department of Labour reported that the consumer price index rose 0.6% in February up from 0.3% in January, pushing the year-over-year rate to 3% from 2.6%.

However, excluding energy and food prices, core inflation rose a modest 0.1%, the same rate as in January. The year-over-year core rate eased to 1.7% in February from 1.9% in January. Bank of Montreal notes that core inflation has dropped almost a full percentage point over the past year.

“In sharp contrast to Canada, the quiescent trend in U.S. core inflation is largely the result of a soft economy and weak pricing power in the current environment. While this is not indicative of deflation, it is clear that inflation remains very well contained in the U.S.,” says RBC Financial. “Nevertheless, a weaker U.S. dollar and a return to above-trend growth in the second half of the year will likely underpin a more gradual rise in price trends later in the year.”

CIBC World Markets says, “The only real uncertainty in the CPI forecast is just how much longer the energy-induced price spike will be, but with crude prices having returned to earth in March prices at the pump should come down in the next couple of months, barring of course any unforeseen complications in the Gulf. The core CPI story is much clearer: a slack US economy and ample excess capacity around the world will leave core prices below 2% inflation. At levels that low inflation is simply not an issue where the Fed is concerned and won’t stand in the way of a cut this spring.”

“The good U.S. CPI news is consistent with the Fed delaying any move toward tightening even if the economy bounces back briskly as we expect,” notes BMO Nesbitt Burns.