Meanwhile, retail inflation rose to a four-month high of 2.57 per cent in February.
Food price inflation for urban areas stood at 1.27 in February 2019 against (-) 0.96 per cent in January 2019 and 2.45per cent in February previous year.
Economists had forecast a 0.2 per cent gain in the monthly core gauge and a 2.2 per cent annual advance.
"Core inflation eased up a bit in February, as prices rose 0.1% (0.11% before rounding) after five months of 0.2% gains".
Prices of milk-based products rose marginally by 0.92 per cent, while egg became dearer by 0.86 per cent, and meat and fish prices recorded a rise of 5.92 per cent.
Economists expected a 1.6% increase in overall prices from a year earlier, and a 2.2% rise in core prices over the 12-month period. Tuesday's report comes days after the February employment report, which showed unsettling signs of a sharp hiring slowdown despite rising wages.
While it's always good for consumers when prices remain stable, the best news in the report is the influence on the Fed's interest rate policy. After adjusting for inflation, average hourly earnings rose a seasonally adjusted 0.3% in February and are up 1.9% from February 2018. In January, the prices declined 4.18 per cent and 13.32 per cent respectively.
Retail inflation rose to a four-month high of 2.57 per cent in February but the prospects for a rate cut has brightened as the number is still below the RBI's inflation target of 4 per cent, while industrial growth declined to below 2 per cent in January.
A KEY measure of underlying U.S. inflation unexpectedly eased in February amid falling prices for cars and prescription drugs, giving the Federal Reserve more room to stick to its plan to be patient about raising interest rates.
Shelter costs, which account for about a third of CPI and mainly include housing expenses, continued to hold up, with the fourth straight monthly increase of 0.3%.
Some economists expect inflation to pick up as the benefits of higher wages flow through the economy. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, gained roughly 8% over the past year. As a result, inflation looks unlikely to get out of hand.
"With nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures, the [Federal Open Market] Committee has adopted a patient, wait-and-see approach to considering any adjustment in the stance of policy", Fed Chairman Jerome Powell said during a speech in Stanford, Calif., last week.
The retail inflation for the month of January 2019 stood at 2.05 per cent, but was later revised to 1.97 per cent.
The annual inflation measure has been steadily declining since July. That index tends to run slightly below the Labour Department's CPI, and January figures are due March 29.
A New York Fed survey of consumer expectations published on Monday showed a drop in inflation expectations in February. It hit the US central bank's 2 percent inflation target in March a year ago for the first time since April 2012.