U.S. CPI Gain Eases in February; Core Prices Firm
by:Tom Moeller
|in:Economy in Brief
Summary
- Energy price decline restrains increase.
- Core goods price inflation is tame; core services prices pick up.
- Energy prices decline; food prices remain strong.
The Consumer Price Index rose 0.4% in February, following a 0.5% increase in January. The 6.0% y/y increase remained below June’s high of 9.1%. Prices excluding food & energy rose 0.5% after increasing 0.4% in each of the prior two months. The 5.5% y/y gain was down from a 6.6% September high. A 0.4% increase in both measures had been expected in the Action Economics Forecast Survey.
The CPI less food, energy and shelter, another measure of core pricing power developed by Haver, increased 0.2% during February for a second month. The 3.7% y/y increase stands below the 7.6% peak in February of last year.
Service costs increased 0.6% (7.3% y/y). Shelter prices rose 0.8% (8.1% y/y) as owners’ equivalent rent of primary residences increased 0.7% (8.0% y/y). Rents rose 0.7% (8.2% y/y), up from 1.9% y/y in 2020. Education & communication prices increased 0.2% (2.9% y/y), while transportation service prices rose 1.1% (14.6% y/y). Recreation service prices improved 1.2% (6.3% y/y), but medical care service costs fell 0.7% (+2.1% y/y) for the second straight month.
Goods prices excluding food & energy eased slightly in February (+1.0% y/y). Used car & truck prices fell 2.8% (-13.6% y/y) but new vehicle prices improved 0.2% (5.8% y/y). Home furnishing prices rose 0.8% (6.3 % y/y) while appliance prices rose 0.7% (1.6% y/y). Apparel prices increased 0.8% (3.3% y/y) for a second straight month while recreation product prices rose 0.4% (2.9% y/y). Medical care product prices edged 0.1% higher (3.2% y/y) while sporting goods prices gained 0.2% (1.1% y/y).
Energy prices fell 0.6% last month (+5.2% y/y) following a 2.0% rise. Natural gas prices collapsed 8.0% (+14.3% y/y) following two months of strong gain. Gasoline prices rose 1.0% (-2.0% y/y). Fuel oil costs fell 7.9% (NSA) but rose 9.2% y/y and electricity prices increased 0.5% (12.9% y/y).
Food prices rose 0.4% in February (9.5% y/y) after a 0.5% January rise but egg prices fell 6.7% (+55.4% y/y). Meat, poultry & fish prices rose 0.6% (3.8% y/y) while cereal & bakery product prices rose 0.3% (14.6% y/y). Fruit & vegetable prices improved 0.2% (5.3% y/y) and dairy prices edged 0.1% higher (12.3% y/y). Nonalcoholic beverage prices strengthened 1.0% (12.3% y/y).
The Consumer Price figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.
A Tight Labor Market Could Keep Rent Inflation Elevated from the Federal Reserve Bank of Kansas City is available here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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