Inflation Cooled for the Eighth Consecutive Month in February
March 15, 2023
Inflation continued to creep down last month, but the Federal Reserve’s efforts to bring down prices have grown even more complicated in recent days.
The Consumer Price Index (CPI) showed that annual price increases continued to slow in February. On a year-over-year basis, CPI was up 6.0%, a slowdown from January’s 6.4% increase. That marks the eighth straight month that the annual inflation rate has declined, and is the lowest reading since September 2021.
On a monthly basis, prices were up 0.4%, a slight cooldown from January’s 0.5% month-over-month increase. Both the annual and monthly gains were in line with economist expectations.
The so-called “core” CPI, which excludes volatile categories like food and energy, was up 5.5% from the year before, inching down one-tenth of a percentage point from January.
Housing prices were the biggest contributor to the inflation in February, accounting for 70% of the month’s gains. On a year-over-year basis, shelter costs are up 8.1%. Food prices continued to cool, but remain high. Overall food prices were up 9.5% annually, which is the lowest rate since last April. Grocery purchases were up 10.2% annually, the lowest reading since March 2022.
The CPI report is on the most recent pieces of economic data before the Fed’s board of governors meet next week to decide if they will raise rates again. However, following the collapse of Silicon Valley Bank and the ensuing turmoil, the Fed’s path has become harder to predict. Rate expectations have been swinging wildly over the past weeks, varying from a half-point hike to holding the line. At points, there has even been chatter that the Fed could cut rates. The current consensus is that we are likely to see a 0.25 percentage point increase.