Inflation’s Rising Again. Here’s What Happened in February

By: Anneken Tappe · March 13, 2024 · Reading Time: 3 minutes

Bad News, Good News

Inflation ticked higher in February, data from the Bureau of Labor Statistics showed this week. While there were some bright spots in the report too, this is a headache for markets and the Federal Reserve, which is looking for persistently lower inflation before cutting interest rates.

The consumer price index rose 0.4% on a seasonally adjusted basis between January and February, the biggest monthly increase since September. It was largely driven by higher costs of shelter and gasoline, which together contributed more than 60% of the increase. Year-over-year, the price index rose 3.2%, slightly more than the 3.1% recorded in January.

Diving Into the Data

Gasoline prices jumped 3.8%, while overall energy costs climbed 2.3% in February. Stripping out energy costs, as well as food, which tend to be more volatile than other components, inflation still rose 0.4% last month.

While this is telling us that there are some stubborn parts of this price puzzle, it’s also telling us some good news when it comes to the cost of food: Food prices held flat month-over-month for the first time since April 2023. Over the year, they rose only 2.2%, the slowest rate since May 2021. Categories like fresh fruit and vegetables and dairy products even got cheaper.

Housing Hurdle

So then what were the stubborn parts? In a word – housing. It’s expensive whether you rent or buy, and prices aren’t as dynamic as most people don’t move apartments every month. Housing costs rose 0.4% last month, down from 0.6% in January, and that’s good news. After all, shelter is one of the biggest components for the CPI. Housing costs may normalize further as the year chugs along, but we still have a ways to go.

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