Consumer Price Index (CPI)

This morning’s year-over-year Headline CPI for February came in at 6.0% and Core CPI, which excludes food and energy, came in at 5.5%. Both figures were in-line with the consensus and a decrease from the previous month’s YoY numbers.

However, on a month-over-month (MoM) basis, Core CPI was up 0.5% in February which was slightly more than the 0.4% increase in January and a bit higher than expected. The index for shelter was the largest contributor to the monthly Headline increase, comprising more than 70%. Food prices were also a contributor to the increase as the food at home index rose 10.2% YoY in February. More specifically, the index measuring cereal and bakery products rose 14.6% YoY.

This is Headline CPI’s smallest increase since September 2021, which seems like positive news, but the reality is that inflation is still an issue and far from the Fed’s 2.0% target. At this time last year, Headline CPI was at 6.5%, one percentage point above today’s level. If CPI continues along this trajectory, it could take years before we reach the Fed’s desired level.

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