Consumer prices rose faster than anticipated in February, driven by surging personal incomes, according to the latest data from the Bureau of Economic Analysis.
- Prices increased by 0.3% in February, marking the third consecutive month at this rate, and surpassing economists’ predictions of a 0.2% rise.
- Year-over-year inflation remained steady at 2.5%, in line with expectations.
Core prices, excluding volatile food and energy, climbed even higher at 0.4%, marking the largest monthly jump since January 2024.
- Annual core inflation accelerated to 2.8%, topping forecasts of a slight decrease to 2.6%.
The Big Picture: February’s price increases coincided with a sharp rise in personal incomes, which jumped 0.8%—nearly triple economists’ projected growth of 0.3%, and the strongest monthly performance since January 2024.
- Consumer spending rebounded modestly, rising 0.4% after January’s 0.3% decline, though still below economists’ 0.5% forecast.
What They’re Saying: Jason Furman, a Harvard professor, tweeted “Core PCE inflation came in a little above the already high expectations in Feb. The pattern is the opposite of what you want to see–the shorter the window the higher the annualized rate”
- Mohamed A. El-Erian, President of Queens College, had a scarier analysis on Twiter. “The whiff of US stagflation is intensifying according to the latest economic data. Core PCE inflation came in at 0.37% for March, with hotter goods and services components, while spending was weaker than expected…”
Bottom Line: We have price growth rising at a time when other metrics are showing a slowing economy. Some economisst are worried we are headed for staglfation.
