February 2018 CPI: Year-Over-Year Inflation Rate 2.2%

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.2 % - up 0.1 % from last month. The year-over-year core inflation (excludes energy and food) rate was unchanged at 1.8 %, and is below the target set by the Federal Reserve.

Analyst Opinion of the Consumer Price Index

Shelter, apparel, and motor vehicle price changes remained the driver for inflation. Core inflation remain below 2.0 % year-over-year.

The market expected (from Bloomberg / Econoday):

  Consensus Range Consensus Actual
CPI-U - month-over-month (MoM) 0.3 % to 0.4 % +0.2 % +0.2 %
CPI-U year-over-year (YoY) 2.1 % to 2.3 % +2.2 % +2.2 %
CPI less food & energy (MoM) 0.1 % to 0.3 % +0.2 % +0.2 %
CPI less food & energy (YoY) 1.8 % to 2.0 % +1.9 % +1.8 %

z cpi1.png

As a generalization - inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy - and cannot be used as a economic indicator.

The major influence on the CPI was again energy prices.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in February on a seasonally adjusted basis after rising 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent before seasonal adjustment. The indexes for shelter, apparel, and motor vehicle insurance all rose and contributed to the 1-month seasonally adjusted increase in the all items index. The food index was unchanged in February, as a decline in the index for food at home offset an increase in the food away from home index. The energy index increased slightly, with its component indexes mixed. The index for all items less food and energy increased 0.2 percent in February following a 0.3-percent increase in January. Along with shelter, apparel, and motor vehicle insurance, the indexes for household furnishings and operations, education, personal care, and airline fares also increased in February. In contrast, the indexes for communication, new vehicles, medical care, and used cars and trucks declined over the month. The all items index rose 2.2 percent for the 12 months ending February, a slightly larger increase than the 2.1-percent rise for the 12 months ending January. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 7.7 percent and the food index advanced 1.4 percent.

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