The Consumer Price Index (CPI) report for February showed inflationary pressures are easing, easing concerns about the health of the US economy after several weeks of market volatility.
The latest data from the Bureau of Labor Statistics showed that the CPI rose 2.8% from a year earlier in February, lower than the 3% annual increase in January and also below economists' expectations of a 2.9% increase.
The US Dollar Index strengthened 0.2% from the previous month, slowing from a 0.5% increase in January and better than economists' estimates of a 0.3% increase on a monthly basis.
In terms of the “core” (core CPI), which excludes the more volatile cost of food and fuel, prices in February rose 0.2% monthly, lower than January’s 0.4% increase and 3.1% annually, the lowest annual increase in the core CPI since April 2021.
This also marked a decline from the 3.3% increase recorded in the previous month and better than the Bloomberg consensus estimate.
This was the first time since July that both the headline CPI and core CPI showed slowing price growth.
Core inflation remained high due to the continued “stickiness” of housing costs and services such as insurance and healthcare. However, the housing component showed signs of easing in February, rising 4.2% annually, the smallest increase in 12 months since December 2021.
On a monthly basis, the housing index rose 0.3% compared to a 0.4% increase in January. Similarly, the rent and owner-equivalent rent (OER) indices both rose 0.3% from the previous month. OER is the estimated rent that homeowners would pay if they rented the same residence.
Meanwhile, the energy index rose 0.2% on a monthly basis after jumping 1.1% in January. On an annual basis, the energy index fell 0.2%, driven by a 1% drop in gas prices after rising nearly 2% in the previous month. Coupled with the drop in gas prices, a 4% drop in airfares also helped to dampen headline inflation.
Food prices showed signs of slowing after several months of higher readings, rising 0.2% last month compared with a 0.5% jump in January. However, egg prices continued to surge—up 10.4% after a 15.2% surge at the start of the year. On an annual basis, egg prices have surged 58.8%.
