Inflation Coming in Hot in February

Consumer price growth came in slightly hotter than expected for the second month of the year, according to the latest data from the Bureau of Labor Statistics.

• M-O-M: The Consumer Price Index for All Urban Consumers rose 0.4% in February, up from the 0.3% rise in January and the biggest monthly increase since August 2023.

• Y-O-Y: The yearly index rose to 3.2% in February, up from 3.1% in January and inline with the variance we have seen these last five months.

Swing & A Miss. Economists predicted a smaller increase of 0.3% in February which they expected to slow the annual index to

Food Unchanged. The Food index was unchanged in February, down from a 0.4% rise in January the first flat month since November 2023.

• The annual index slowed to 2.2% in February, down from 2.6% in January and the lowest level since May 2021.

Energy Up. The energy index rose 2.3% in February, up from the 0.9% decline in January and the biggest monthly jump since August 2023.

• The annual index is still in negative territory with prices down 1.9% from one year ago, up from the 4.6% decline reported in January and the highest level since September 2023.

• Gasoline prices jumped 3.8% in February after four months of declines. It was the biggest monthly jump since August 2023.

Core. The core index rose 0.4% in February, the same increase as last month and is the highest increase since April 2023. The yearly index slowed to 3.8% in February, down from 3.9% in January and the lowest level since May 2021.

• The shelter index increased 0.4% in February, down from the 0.6% rise in January and the same increase we saw in December and November.

• Shelter costs annual index slowed to 5.7% in February, down from 6.0% in January and the lowest level since July 2022. NOTE: Shelter costs continue to be the largest factor in the monthly increase.

BOTTOM LINE: Despite many annual indexes falling to 2-3 year lows, this was a disappointing report. A 0.4% monthly rise is a 4.8% annualized rate that is way too hot and should cool any thoughts anyone had about a rate cut happening before June.