Consumer Prices Rose in February


Consumer prices rose modestly in February, reflecting increases in energy prices and the food index.

The Bureau of Labor Statistics (BLS) released the Consumer Price Index for February. On a seasonally adjusted basis, the Consumer Price Index (CPI) rose by 0.2% in February after being unchanged for three consecutive months, as shown in Figure 1. Excluding the volatile food and energy components, the “core” CPI increased by 0.1% in February, following a 0.2% increase in January. Despite decreases in indexes for recreation, medical care commodities, new vehicles, and used cars and trucks, increases in indexes for shelter, personal care, apparel and education contributed to the increase in the “core” CPI.

The price index for a broad set of energy sources increased by 0.4% in February, following three consecutive declines in October (-2.8%), November (-2.6%), and December (-3.1%). The February increase in energy prices was mainly contributed by the increases in the prices of energy commodities, including gasoline and fuel oil. The food index rose by 0.4% in February, faster than a 0.2% increase in January.

The figure below shows monthly changes in the CPI, the “core” CPI, energy prices and the food index in the past four months. In February, the CPI rose as energy prices and the food index increased by 0.4%, respectively.

Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.5% in February, slower than a 1.6% increase in January. It was the smallest gain since September 2016 on a year-over-year basis. Meanwhile, the “core” CPI increased by 2.1% over the past twelve months, after rising 2.2% in January.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index rose by 0.2% in February, after rising 0.1% in January. Over the past twelve months, the monthly growth rate of the Real Rent Index was 0.1% on average, slower than the average of 0.2% in 2017.

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