Cheaper energy helped keep overall consumer prices and vital core prices in check in February, the US Labor Department said today.
The department said its Consumer Price Index, the most widely used gauge of inflation, was flat last month after rising 0.4 per cent in January.
Even more significantly, core consumer prices that exclude volatile food and energy items were unchanged after climbing 0.3 per cent a month earlier.
The favourable prices report led futures markets to predict Federal Reserve policy-makers will feel free to move more aggressively on interest-rate cuts to spur a flagging economy when they meet next Tuesday.
Stock futures rose and the dollar's value rose against the yen but slipped further against the euro after the prices data was issued.
Analysts questioned whether the one-month report meant inflation pressures were truly easing but agreed it created breathing-room for the Fed to lower rates more aggressively to try to stimulate the economy.