Consumer prices rise more than forecast as inflation pressures persist

Inflation pressures remained persistent in February as prices for shelter and gas rose, according to the latest data from the Bureau of Labor Statistics released Tuesday morning.

The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.2% over the prior year in February, slightly higher than January’s 0.3% month-over-month increase and 3.1% annual gain.

Both measures roughly matched economist forecasts of a 0.4% month-over-month increase and a 3.1% annual increase, according to data from Bloomberg.

On a “core” basis, which strips out the more volatile costs of food and gas, prices in February climbed 0.4% over the prior month and 3.8% over last year. Both measures were higher than economist expectations of a 0.3% monthly increase and 3.7% annual gain.

Tuesday’s results represented the last inflation print before the Fed’s next policy decision on March 20. Investors are hopeful the central bank will cut interest rates this year.

After the data’s release, markets were pricing in a nearly 100% chance the Federal Reserve keeps rates unchanged next week, according to data from the CME Group.

The market now largely expects the central bank to begin cutting rates at its June meeting, pricing in roughly 60% chance of a cut.

Shelter remains sticky, gas prices rise

Notable call-outs from the inflation print include the shelter index, which rose 5.7% on an unadjusted, annual basis and 0.4% month over month, a deceleration from January’s 6% annual increase and 0.6% monthly rise.

Sticky shelter inflation is largely to blame for higher core inflation readings, according to economists.

The index for rent and owners’ equivalent rent (OER) rose 0.5% and 0.4% on a monthly basis, respectively. Owners’ equivalent rent is the hypothetical rent a homeowner would pay for the same property. In January, the index for rent rose 0.4% while OER increase 0.6%.

Energy prices — largely to blame for the increase in headline inflation — rose following several months of declines, buoyed by gas prices. The index jumped 2.3% in February after falling 0.9% in January. Still, on a yearly basis, the index fell 1.9%.

Gas prices climbed a significant 3.8% from January to February after falling 3.3% the previous month.

The BLS noted the airline fares index rose 3.6% in February, following a 1.4% increase in January. The index for motor vehicle insurance increased 0.9% over the month. Other indexes that rose in February included apparel, recreation, and used cars and trucks.

The food index increased 2.2% in February over the last year, with food prices holding steady from January to February. The index for food at home also held steady over the month after rising 0.4% in January.

Food away from home, however, ticked up 0.1% month over month after rising 0.5% in January.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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