The Consumer Price Index measures the change in prices of different necessities for urban consumers each month and tracks inflation. In February, the Index increased by 0.4% from the month prior and 3.2% from a year ago. The monthly rate is in line with what many experts predicted, though the year change is slightly above the 3.1% that was expected.
The 0.4% increase was led by a 2.3% increase in energy costs. The U.S. Bureau of Labor Statistics reported that the increases in the energy and shelter sectors were responsible for over 60% of the total gain.
February’s increase was the largest since September, with the month-over-month percentage change gradually increasing since October.
Food Prices Reach Lowest Point in Nearly a Year
Despite the unexpected jump, certain industries managed to slow down, such as the food and housing sectors. The steadiness from the food sector in particular was shocking, as this is the first time that it has not increased since April 2023. Food away from home, such as restaurants and take-out, saw a slight jump at 0.1%, but food at home saw no change at all.
The decrease in food prices was led by dairy-related products, more specifically cheese and related products which fell by 1.1%. Additionally, cereals and bakery products dropped by 0.5% and the fruits and vegetables index fell by 0.2%.
In the past 12 months, cereals and bakery products increased by 1.7% and fruits and vegetables increased by 0.8%. On the other hand, dairy-related products decreased by 1.8% in the same span and the meats, poultry, fish and eggs index fell by 0.5%.
Volatile Energy Prices Spearhead Monthly Increase
After decreasing by 0.9% in January, energy, as a whole, saw a 2.3% increase, the largest since August 2023. The majority of the blame for this can be focused on energy commodities and gasoline prices. Gasoline increased by 3.8% last month, which is also the highest it has been since August.
While the monthly numbers showed a concerning rise, the energy index is still down 1.9% over the past 12 months and gasoline prices decreased by 3.9%. On the contrary, electricity rose by 3.6% over this 12-month span despite only rising by 0.3% in February.
Housing Slows Down, But Still Yields Concerns
While energy was the driving force in this month’s rise, housing contributed to the rise as well, despite decreasing. The shelter index has increased by 5.7% in 12 months, despite only rising by 0.4% last month. This number is a slight decrease from the 0.6% jump in January, though still not drastic enough to affect the numbers over that span.
According to Zillow, last month’s rent was 30% above pre-pandemic levels, reaching $1959. This price increase has impacted suburban and rural areas more since they tend to have lower costs, with metropolises like Boston and New York City not fully experiencing the jump.
CPI Predictions for March
For this month, the CPI is expected to see a significant drop falling to 2.88% in March. However, economists are anticipating that April will be the pivotal index, when it reaches 3.78%, the highest rate expected by any month other than June.
While economists’ predictions for March were slightly off, the numbers were roughly similar, meaning that we can assume the index will sit at a rate of roughly 2.9-3.0% this month.