Editor’s note: This story was updated to add more detail and context.
U.S. consumer inflation held steady in February, with prices rising at an annual pace consistent with market expectations, according to government data released Wednesday.
The Consumer Price Index (CPI) rose 2.4% year over year, the latest figures from the U.S. Bureau of Labor Statistics showed, matching both January’s reading and economists’ esimates.
On a monthly basis, consumer prices increased 0.3%, a modest acceleration from 0.2% in January, but still broadly in line with forecasts.
Core inflation — which strips out the more volatile food and energy components — also remained unchanged, coming in at 2.5% annually, again matching both the previous reading and consensus expectations.
It is worth noting that the data were collected before the outbreak of the war in Iran, which has since pushed gasoline and diesel prices sharply higher, meaning the latest CPI figures may not yet capture the inflationary impact of the recent spike in energy markets.
Shelter And Food Continue To Drive Monthly Gains
Shelter remained the largest contributor to February’s monthly increase, with the index rising 0.2%. Food prices also moved higher, climbing 0.4% overall. Within that category, the food-at-home index rose 0.4%, while food away from home increased 0.3%.
Energy prices also edged higher during the month, rising 0.6%, while the core CPI — excluding food and energy — increased 0.2%.
Several consumer categories recorded notable price increases. Medical care, apparel, household furnishings and operations, airline fares and education all posted gains in February.
By contrast, prices declined in communication services, used cars and trucks, motor vehicle insurance and personal care, providing some offset to the broader inflation picture.
Fuel And Freight Costs Had Already Jumped Before The War
Looking deeper into the CPI basket reveals a handful of categories that experienced unusually large price swings during the month.
- Moving, storage and freight expenses jumped 13.5% month over month, one of the largest increases in the report.
- Fuel oil prices surged 12.8%, a move that notably preceded the latest oil shock tied to the war in Iran East conflict.
- Computer software and accessories rose 6.5%, notably countering market fears related to AI disruption affecting software pricing.
On the other side of the ledger, some digital services saw steep declines. Prices for subscriptions and rentals of video and video games plunged 8.7% during the month, one of the sharpest drops in the CPI basket.
Market Reactions
Financial markets reacted cautiously following the release as energy prices resumed their climb amid mounting uncertainty surrounding the Strait of Hormuz.
U.S. equity futures slipped in premarket trading. S&P 500 futures fell 0.31%, Dow Jones futures dropped 0.5% and contracts on the Nasdaq 100 futures declined 0.3%.
On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.16% lower in another volatile day for energy markets.
Bond markets also reflected renewed inflation concerns. The yield on the 10-year U.S. Treasury rose 4 basis points to 4.19%, as investors weighed the possibility that the latest surge in energy prices could complicate the inflation outlook in the months ahead.
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