Categories: News

US Inflation: Consumer prices rise 6% over last year in February, slowest since Sept. 2021

US inflation showed continued signs of cooling off in February but remained stubbornly high and well above the Federal Reserve‘s 2% target in the year’s second month, according to the latest data from the Bureau of Labor Statistics released Tuesday morning.

The Consumer Price Index (CPI) revealed headline inflation rose 0.4% over last month and 6% over the prior year in February, a slowdown from January’s 0.5% month-over-month increase and 6.4% annual gain. Both measures were in-line with economist expectations, according to data from Bloomberg.

Advertisement

The 6% jump in inflation marks the slowest annual increase in consumer prices since September 2021.

“Core” inflation, which strips out the more volatile costs of food and energy, rose 0.5% over the prior month in February and 5.5% over last year, marking the smallest 12-month increase since December 2021. Economists had estimated “core” inflation would rise 0.4% on a month-over-month basis and increase 5.5% compared to February 2022.

Advertisement

“The 0.5% [month-over-month] rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely to have a bigger bearing on what happens at next week’s FOMC meeting,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics, in a note on Tuesday.

U.S. stocks surged following the release of the data, and Treasury yields moved higher. Tuesday’s inflation data also comes against the backdrop of the stunning collapse of Silicon Valley Bank last week, which had pared expectations for the Fed’s next move with markets now pricing in a 25 basis point, or 0.25%, rate hike later this month.

Advertisement

The energy index increased 5.2% for the 12 months ending February, while the food index increased 9.5% over the last year. The energy index dropped 0.6% from January to February, led by a 7.9% drop in the price of fuel oil. Gas prices rose 1.7% over last month in February but fell 2% from the same month last year.

The shelter category of CPI rose 8.1% over the last year, accounting for over 60% of the total increase in “core” inflation.

Advertisement

Food costs continued to rise in February, with the food index rising 0.4% over last month. The food at home index rose 0.3% over last month as five of the six major grocery store food group indexes increased over the month, the BLS noted. Egg prices fell 6.7% in February.

‘Financial stability dilemma’

The Federal Reserve has hiked interest rates by a cumulative 4.5% over the past year in an effort to quell inflation as Fed Chair Jerome Powell commits to aggressive monetary policy

Last week, investors placed a better-than-50% chance on the Fed raising rates by 50 basis points this month following two days of testimony from Fed Chair Jerome Powell that emphasized interest rates were likely to go higher than previously forecast.

Developments from the banking sector over the last week have changed this outlook with some Wall Street analysts surmising the recent failure of Silicon Valley Bank (SIVB), and the risk of stoking financial instability, will alter the Federal Reserve’s plans.

Advertisement

“February inflation data probably doesn’t ease or complicate the Fed’s price stability versus financial stability dilemma,” Seema Shah, chief global strategist at Principal Asset Management, wrote in reaction to Tuesday’s report.

The Fed, which has a current benchmark interest rate target of 4.5%-4.75%, has hiked rates by a cumulative 4.5% over the past year in an effort to quell inflation. Consumer prices peaked last summer, hitting a roughly 40-year high of 9.1%.

Advertisement

“The February consumer price index doesn’t alter our call for a 25 bps rate hike at the next FOMC meeting,” wrote Ryan Sweet, chief U.S. economist at Oxford Economics, in a note on Tuesday. “Though stress has spiked in the banking system, the Fed is still highly focused on taming inflation. …We believe the Fed will continue to raise interest rates to cool the economy and take the edge off inflation.”

-Yahoo Finance.

Advertisement
Oluchi Nzekwe

Recent Posts

Breaking: FIRS Announces Fresh Recruitment, See Eligibility Criteria, Application Deadline

The Federal Inland Revenue Service (FIRS) has begun its recruitment exercise for experienced professionals to…

51 minutes ago

Primate Ayodele’s Prophecies For 2025

Primate Elijah Ayodele Unveils 94-Page Prophecy for 2025, Makes Striking Predictions About Nigeria’s Political and…

3 hours ago

Tinubu’s Aide Condemns Plan To Reinstall ‘Jesus Is Not God’ Banner In Lekki Mosque

The Senior Special Assistant to President Bola Tinubu on Community Engagement (North Central), Abiodun Essiet,…

6 hours ago

President Tinubu’s reforms not responsible for food stampedes – FG

The Minister of Information and National Orientation, Mohammed Idris, has warned politicians against linking stampedes…

6 hours ago

I will be more influential in Nigeria than UK – Tobi Adegboyega

Tobi Adegboyega, founder of the Salvation Proclaimers Anointed Church (SPAC Nation), has stated that he…

6 hours ago

Petrol To Sell ₦‎935/Litre From Today – IPMAN

The Independent Petroleum Marketers Association of Nigeria has said that petrol is going to sell…

6 hours ago