Sharp Increases in Energy Prices in February


Consumer prices increased by 0.4% in February as energy prices rose sharply, while “core” consumer prices increased moderately given relatively weak demand. Inflationary pressures remained subdued amid the weak economic situation, although inflation expectations are rising.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.4% in February on a seasonally adjusted basis, marking the biggest increase in six months. Excluding the volatile food and energy components, “core” CPI increased by 0.1% in February, following two unchanged months. While the indexes for shelter (0.2%), recreation (0.6%), medical care (0.3%), and motor vehicle insurance (0.7%) all rose over the month, the indexes for used cars and trucks (-0.9%), airline fares (-5.1%), and apparel (-0.7%) declined.

Energy prices continued to rise at a fast pace in February. The price index for a broad set of energy sources increased by 3.9%, after a gain of 3.5% in January. It marks the biggest monthly increase in the past eight months. The jump in energy prices accounted for over half of the seasonally adjusted increase in overall prices. The food index rose by 0.2% in February, after a 0.1% increase in January. The index for food at home rose by 0.3% in February, while the index for food away from home rose by 0.1%.

During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.7% in February, the biggest increase in the past year. Meanwhile, the “core” CPI increased by 1.3% over the past twelve months, slower than a 1.4% increase in January. The food index rose by 3.6% and the energy index rose by 2.4% over the past twelve months.

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