Inflation, a measure of the prices you pay, continues to pinch Americans’ pocketbooks, though a gradual cooling appears to continue.
The Bureau of Labor Statistics’ Consumer Price Index, released Wednesday morning, rose slightly to 0.3% on a seasonally adjusted basis in February, just as economists had expected. It was up 0.2% in January.
Over the past 12 months, consumer prices were up 2.4% before seasonal adjustment — the same rate as in January, and also as expected.
The data was compiled before the U.S.-Israel war against Iran began, so the subsequent sharp rise in oil prices is not reflected in this report. However, it will be another factor for the Federal Reserve to consider before deciding on interest rates next week. Broad expectations are for the Fed to keep interest rate cuts on hold.
Here’s what the latest inflation report means for your spending power.
Learn more: What is the Consumer Price Index (CPI)?
“Core” inflation, which excludes food and energy, rose 2.5% for the 12 months ending in February, the same as reported in January.
“With price pressures broadly decelerating, we’re seeing encouraging signs that core inflation is moving in the right direction,” Gargi Chaudhuri, chief investment strategist for BlackRock, said in an analysis. “That said, rising gasoline prices are a reminder that energy remains a swing factor, and could reintroduce volatility into headline prints in the months ahead.”
Gas prices reversed a two-month lower-price trend in February and rose 0.8%, yet were still down 5.6% for the past 12 months. Meanwhile, fuel oil prices were up 11.1%.
Again, this is before the Mideast war began and oil prices spiked at the beginning of March.
Housing costs claim the largest share of consumers’ budgets, though they continue to moderate, rising 0.2% in February, and up 3% for the year. That equaled the increase in January.
Other costs that saw increases were airfares (up 1.4% after a massive 6.5% increase in January), apparel (up 1.3%), education, household furnishings and operations, and medical care.
Lower used-car and truck prices were noted (-0.4%), while new-vehicle prices were unchanged.
Food prices increased 0.4% in February, slightly higher than the 0.2% gain in January. That makes for a 3.1% gain over the past 12 months, though consumers may feel that’s below the markup they’ve seen over the period.
The biggest grocery price gains in February included: fresh vegetables (4.1%), candy and chewing gum (3.7%), coffee (1.8%), peanut butter (1.8%), fruits and vegetables (1.4%), and frozen foods (1.4%).
Among the largest price declines for the month were: lunchmeats (-4.9%), pork roasts, steaks, and ribs (-4.5%), eggs (-3.8%), and butter (-2.65%).
While February’s inflation report seems tame overall, one major event looms for the March print: the Middle East war.
“This is likely to be the best we are going to see on the U.S. inflation front for a while, with the outbreak of war with Iran and the effective closure of the Strait of Hormuz spiking energy prices,” Scott Anderson, BMO chief U.S. economist, said in a note to clients. “The U.S. CPI report largely met our forecast for February. But that doesn’t mean inflation is under control.”