By Elisa Fernández-Arias
Month over month, headline inflation in February was 0.4 percent, demonstrating a slowdown. Year over year, it was 6 percent, the slowest annual increase since September 2021 in consumer prices.
Key Takeaways:
- According to The Consumer Price Index (CPI), inflation reflected continued signs that it was cooling off in February.
- “Core” inflation was 5.5 percent year-over-year, the smallest annual increase seen since December 2021.
- Household furnishings and supplies prices went up by 0.8 percent in February, bringing the year-over-year increase to 6.3 percent — slightly higher than the overall inflation of 6 percent.
According to The Consumer Price Index for All Urban Consumers (CPI-U) — February 2023, released by the Bureau of Labor Statistics on Tuesday, inflation reflected continued signs that it was cooling off last month — though it was still higher than what is needed to reach the target of 2 percent annual inflation set by the Federal Reserve.
The CPI showed that headline inflation in February was 0.4 percent month-over-month, as compared to January’s 0.5 percent, demonstrating a slowdown.
Year over year, headline inflation was 6 percent — below January’s 6.4 percent and the slowest annual increase since September 2021 in consumer prices. February inflation performance was in line with what economists expected, according to Bloomberg data.
The CPI also showed that “core” inflation, which takes out volatile energy and food costs, was 0.5 percent month-over-month. Year over year, it was 5.5 percent, the smallest annual increase seen since December 2021. These rises were also in line with economists’ expectations.
When it came to expenditure categories relevant to the kitchen and bath industry, household furnishings and supplies prices went up by 0.8 percent in February. This brought the year-over-year increase to 6.3 percent, slightly above the overall inflation of 6 percent. Subcategories that experienced YOY inflation above overall inflation included floor coverings and window coverings. In contrast, furniture and bedding, bedroom furniture, appliances, living room, kitchen, and dining furniture and clocks, lamps, and decorator items experienced inflation below that threshold.
Deputy chief U.S. economist at Capital Economics, Andrew Hunter, wrote on Tuesday that, “The 0.5% [month-over-month] rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely to have a bigger bearing on what happens at next week’s FOMC meeting.”
It is likely that there will be a rate hike of 0.25 percent at the upcoming meeting, according to chief economist at LPL Financial Jeffrey Roach. “Even amid current banking scares, the Fed will still prioritize price stability over growth,” he explained. Other economists agreed with him that there would be a hike — though Goldman Sachs’ chief economist, Jan Hatzius, disagreed, saying that he believed there would be a “pause” in the Fed’s rate hiking program.
Sources:
Consumer Price Index – February 2023 News Release, U.S. Bureau of Labor Statistics
Consumer Price Index Summary Economic News Release, U.S. Bureau of Labor Statistics
Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago, CNBC