The U.S. Bureau of Labor Statistics released the inflation report for February, showing that consumer prices rose less than expected. The Consumer Price Index (CPI) increased by 0.2% from the previous month and by 2.8% compared to the same period last year.
CPI is a widely used indicator to measure the economic costs in the United States. Data from the Bureau of Labor Statistics revealed that the month-on-month and year-on-year increases in CPI for February were lower than the 0.3% and 2.9% predicted by Dow Jones.
Excluding the more volatile food and energy prices, the core CPI for February increased by 0.2% month-on-month and by 3.1% year-on-year, which were both lower than the economists’ forecasts of 0.3% and 3.2% respectively.
Breaking down the specific categories in the inflation report, housing costs rose by 0.3% from the previous month and by 4.2% from the same period last year. This index draws particular attention as it holds significant weight in the CPI (approximately one-third).
In addition to housing costs, food prices rose by 0.2% month-on-month and by 2.6% year-on-year; energy prices increased by 0.2% month-on-month but decreased by 0.2% year-on-year; new car prices went down by 0.1% month-on-month and by 0.3% year-on-year; prices for used cars and trucks rose by 0.9% month-on-month and by 0.8% year-on-year; and transportation service prices went down by 0.8% month-on-month but rose by 6% year-on-year.
According to CNBC, Kay Haigh, Co-Head of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management, stated that the February CPI release further indicates progress in potential inflationary pressures. The pace of price increases has slowed down since January.
“Although the Federal Reserve may still maintain its interest rates at the current levels during this month’s meeting, the easing of inflation pressures and the rising downside risks to economic growth collectively indicate that the Fed is moving towards continuing its accommodative monetary policy stance,” Haigh remarked.