The Labor Department reported Friday that consumer prices were unchanged last month, a better performance than the expected 0.3 percent gain.
Core inflation, which excludes energy and food, also held steady in February after a worrisome 0.3 percent jump in January.
The better-than-expected February inflation reading probably will be reversed in coming months because of the recent spike in energy prices. Crude oil hit a record high this week above $110 per barrel and gasoline pump prices jumped to a national record of $3.28.
David Wyss, chief economist at Standard & Poor's in New York, said that he believed the economy was currently in a recession, which will help ease pressures on prices. However, he said offsetting that in part was the big decline in the value of the dollar, which is driving up the cost of imported goods.
Wyss predicted a big jump in consumer prices for March, reflecting the rebound in gasoline and other energy prices that has already occurred.
For February, energy prices posted a 0.5 percent decline. Gasoline prices fell by 2 percent, the biggest drop since last August.
Gains in food costs eased, too. They rose by 0.4 percent after a 0.7 percent jump in January.
The price of vegetables, fruit, poultry and pork declined. But the price of cereal and bakery products shot up by 1.8 percent, the largest monthly increase since January 1975. The higher costs partly reflect higher energy prices, which raise transportation costs. Also food prices have come under pressure because of the increased demand for corn in ethanol production.
The flat reading for core inflation in February left underlying inflation rising by 2.3 percent over the past 12 months. That still is above the Federal Reserve Board's comfort range of 1 percent to 2 percent.
But the good reading in February should bolster the view that the central bank will move aggressively to cut interest rates next Tuesday in an effort to battle spreading economic weakness.
Many private analysts believe the Fed will cut rates by as much as one-half to three-fourths of a percentage point, seeking to either prevent a full-blown recession or at least moderate its effects.
Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh, said the combination of the more benign inflation report as well as continued fallout from the credit crisis would prompt the Fed "to give Wall Street what it wants" with an aggressive three-fourths of a percentage point rate cut next week.
