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First Cut: February CPI year-over-year lowest since September 2016, but core still aligned with Fed’s 2% objective

The February CPI was up 0.2% month-over-month on gains in food (up 0.4%) and energy (up 0.4%) and on costs for shelter (up 0.3%). Compared to a year-ago, the index was up 1.5%, the lowest since 1.5% in September 2016. However, the CPI excluding food and energy edged up 0.1% in February from January and was up 2.1% compared to February 2018.

February saw gasoline prices break a three-month string of declines and rise 1.5% month-over-month, and fuel oil up 2.6% after three months of decreases. Shelter costs — which has a relative value of 33.307 of the CPI total as compared to the 13.379 for food and 7.143 for energy — remained on a steady pace of gains and was up 3.4% compared to last year.

The underlying tend for consumer prices remains near the Fed’s 2% objective. Fed policymakers will find nothing here to suggest that wage inflation is creeping into consumer prices, but will remain wary as upward pressure continues.


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