US: February CPI did not show many signs of cooling – Wells Fargo
Data released on Tuesday showed the US Consumer Price Index rose 0.4% in February, as expected, while the annual rate slowed from 6.4% to 6%. Analysts at Wells Fargo argue the report did not show many signs of cooling in consumer inflation and warn there were only a few positive developments in the data.
Headline CPI coming down gradually
“Consumer price inflation did not show many signs of cooling in the February CPI. There were only a few positive developments in the data. Prices at the grocery store rose just 0.3%, the smallest increase since March 2021. Used auto prices continued to come back down to Earth and fell another 2.8% in the month.”
“Prices for food consumed away from home rose 0.6% in a potential sign that inflationary pressures emanating from the tight labor market remain in place. On a year-over-year basis, headline inflation continued to come down amid slower food and energy inflation. Headline CPI has risen 6.0% over the past 12 months, the smallest year-ago change since September 2021.”
“But beyond these pockets of improvement, core CPI inflation remained entrenched at uncomfortably high levels. With core CPI up 0.5% in February, it is rising at an annualized rate of more than 5% whether measured on a 1-month, 3-month or 12-month basis.”
“With more than a week to go until the next FOMC meeting, a 25 bps rate hike is still a distinct possibility if financial stresses ease.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
