Inflation in February was hotter than expected, driven largely by increases in shelter and gas prices. The shelter index rose 5.7% on an annual basis and 0.4% month over month, contributing to higher core inflation readings. Rent and owners’ equivalent rent also saw increases, with owners’ equivalent rent rising 0.4% monthly.
Seema Shah, chief global strategist at Principal Asset Management, noted that while core services inflation remained high, shelter inflation slightly decreased. She warned that price pressures will subside gradually, keeping rate cut expectations for June stable for now.
Energy prices, particularly gas prices, also rose in February after several months of declines. Gas prices climbed 3.8% from January to February due to seasonality and a pullback in US refinery utilization. Other indexes that saw increases included apparel, recreation, and used cars and trucks.
The food index also jumped 2.2% over the last year, with food prices remaining steady from January to February. Food away from home saw a slight increase, while food at home held steady. The BLS reported increases in airline fares and motor vehicle insurance as well.
Overall, the February inflation print suggests a mixed picture, with some prices rising while others remain steady. Economists will be closely watching future inflation data to determine the trajectory of the economy and potential rate cuts.
