Shelter and Food Prices Drive Up US Consumer Inflation in February

Key Takeaways

• Consumer price index (CPI) rose by 0.4% for the month, putting annual inflation rate at 6%, in line with Dow Jones estimates.
• Core CPI, which excludes volatile food and energy prices, increased by 0.5% in February and 5.5% on a 12-month basis.
• The report, along with Wednesday’s producer price index, will be the last inflation-related data points policymakers will see before their meeting on March 21-22.

Overview of Consumer Price Inflation Report

US consumer prices increased by 0.4% in February, with an annual inflation rate of 6%, in line with market expectations.

The core CPI, which excludes energy and food prices, increased 0.5% in February and 5.5% on an annual basis.

The increase in the index for shelter was the biggest contributor, accounting for over 70% of the overall increase, followed by the indexes for food, recreation, and household furnishings and operations.

The energy index decreased by 0.6% over the month. The food index increased by 9.5% over the last year.

These figures will be used to guide Fed monetary policy at its March 21-22 meeting.

Bank sector turmoil has fueled speculation that rate hikes could soon end.

Market pricing suggests another 0.25 percentage point rate hike to the benchmark federal funds rate is expected this week.