Inflation rose again in February, slightly outpacing analyst forecasts due to a spike in energy and shelter costs but remaining well behind 2022 rates.
According to a Labor Department report released today, March 12, the Consumer Price Index (CPI), the preferred inflation metric of the Federal Reserve, rose 0.4% from January and 3.2% from last February. The latter number represents a slightly faster pace than the previous month’s 3.1% but remains below December’s 3.4% rate. The increase was slightly larger than expected.
The “core” CPI rating, which excludes food and energy prices due to their unpredictable nature, remained at 0.4% on a month-over-month basis but was higher than the standard CPI on a year-over-year basis, hitting 3.8%. However, energy was a primary contributor to the month’s inflation increase, alongside shelter. Costs rose 2.3% for energy and 0.4% for shelter; both numbers accounted for 60% of February’s 3.2% pace.
Inflation cooled over the final quarter of 2023, encouraging analysts as the U.S. entered 2024. Now that increases in consumer prices have started to speed up, the economy has less than a month to determine whether inflation falls above or below the previous period.
Nevertheless, most trends point to weaker consumer prices, with occasional spikes occurring on a monthly or annual basis. Since last year, the Federal Reserve has continued to suggest it will cut interest rates, initially raised to deter inflation, at some point in 2024. While the bank previously said it expected to adjust rates this June, it is possible, given February’s report, that the board will instead choose to postpone a cut until late summer when it convenes later this week.