Inflation Cooled to 6% in February
Washington, DC, March 14, 2023-The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in February on a seasonally adjusted basis, after increasing 0.5% in January, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all items index increased 6.0% before seasonal adjustment.
The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing. The food index increased 0.4% over the month with the food at home index rising 0.3%. The energy index decreased 0.6% over the month as the natural gas and fuel oil indexes both declined.
The index for all items less food and energy rose 0.5% in February, after rising 0.4% in January. Categories which increased in February include shelter, recreation, household furnishings and operations, and airline fares. The index for used cars and trucks and the index for medical care were among those that decreased over the month.
According to the Wall Street Journal, “Elevated inflation cooled modestly in February, as the Federal Reserve faces dual threats of rising prices and financial instability.
“The consumer-price index, a closely watched inflation gauge, rose 6% in February from a year earlier, versus a 6.4% gain the prior month, the Labor Department said Tuesday, the slowest pace since September 2021. The smaller increase comes as the Fed contemplates its next interest rate move while confronting price pressures and bank failures.
“When excluding volatile food and energy prices, consumer prices advanced 5.5% from a year earlier in February compared with 5.6% in January. Economists view so-called core prices as a better indicator of future inflation.
“Prices rose 0.4% in February over the prior month versus a 0.5% increase in January. Core prices increased by 0.5% in February compared with a 0.4% monthly gain in January.
“Consumers paid less last month to heat their homes, and prices for medical services and used cars fell as well. Gasoline and food prices both increased, but at a slower pace than they did in January. Shelter costs increased 0.8% over the month.
“Year-over-year inflation has cooled from a recent peak last June but has remained stubbornly high. That combined with a strong labor market and solid consumer spending introduced the possibility that the Fed could raise its benchmark interest rate by a half-percentage-point at its March 21-22 meeting, after opting for a smaller increase in early February. But the collapse of Silicon Valley Bank and other financial institutions in recent days complicated that decision. The central bank may move more cautiously to assess the state of the financial system.”