US Markets
Tuesday, March 12th, 2024 2:04 pm EDT
Key Points
- Inflation rose again in February, with the consumer price index (CPI) increasing by 0.4% for the month and 3.2% from a year ago, slightly exceeding the forecasted 3.1%. Excluding volatile food and energy prices, the core CPI also rose by 0.4% on the month and was up 3.8% on the year, indicating persistent inflationary pressures.
- The increase in energy costs by 2.3% significantly contributed to the headline inflation number, while shelter costs also rose by 0.4%. Gasoline prices surged by 3.8% on the month, further contributing to inflation. Despite hopes for a decrease in shelter prices, reports suggest that home prices are expected to rise, adding to inflation concerns.
- Fed officials have signaled that rate cuts are likely at some point this year, but the latest CPI report indicates that the Fed still lacks the “greater confidence” needed to begin cutting interest rates. The shift in the Fed’s stance has resulted in a repricing on the pace of rate cuts, with futures traders now expecting the first reduction in June instead of March, reflecting uncertainty about the durability of inflation amidst a bustling economy and strong labor market.
Inflation in the U.S. rose again in February, with the consumer price index (CPI) increasing by 0.4% for the month and 3.2% from a year ago, slightly ahead of the forecasted 3.1%. Excluding volatile food and energy prices, the core CPI also rose by 0.4% on the month and was up 3.8% on the year. Energy costs, specifically a 2.3% increase, played a significant role in boosting the headline inflation number, while shelter costs rose by 0.4%. This persistent inflation, especially in shelter costs, is keeping the Federal Reserve cautious about lowering interest rates quickly. Despite signals from Fed officials that rate cuts are likely at some point this year, the latest CPI report indicates that the Fed still lacks the “greater confidence” needed to begin cutting interest rates. Financial markets have adjusted their expectations, with futures traders now anticipating the first rate reduction in June instead of March, reflecting a shift in the Fed’s stance towards monetary policy. The strong economy, supported by resilient consumers and robust job growth, has allowed the Fed to focus on incoming data and avoid rushing into rate cuts, although concerns about the durability of inflation persist, particularly regarding housing costs.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/03/12/cpi-inflation-report-february-2024-.html
