February consumer prices in the United States rose a stronger-than-expected 0.7% following unchanged prices in January. Expectations going into the report had been for a solid increase though by a more moderate 0.5%. The sizable monthly increase pushed the year-over-year rate up to 2.0% from 1.6% in January.
Experts' expectations going into the report for a solid increase in the month were largely based on indications of a spike in gasoline prices, this component jumping 9.1% following declines of 3.0% and 1.9% in January and December, respectively. There was little evidence of last summer’s drought having an upward impact on food prices as they were only up 0.1% in the month from unchanged prices in January.
Excluding both the food and energy components, the so-called core measure rose an expected 0.2% following a 0.3% gain in January. On a year-over-year basis this pushed the annual rate up to 2.0% in February from 1.9% in January.
The core measure saw a number of services components showing solid increases in the month with both the recreation and education/communications components rising 0.3%. These gains were tempered by apparel prices dropping 0.1% after a 0.8% gain in January and new car prices dropping 0.3% following a 0.1% increase the previous month.
According to experts at RBC Economics, "Though the overall CPI showed a sizable increase in the month, the annual rate remains moderate and in line with the (U.S. Federal Reserve's) objective' of 2%. As well, most of the upward pressure was narrowly based in the gasoline component with indications that this pressure has already started to reverse in March."
