Here’s the inflation breakdown for February – in one chart

A customer shops at a grocery store in Brooklyn on February 14, 2023.

Michael Nagle/Xinhua via Getty Images

Annual inflation continued its gradual cooling trend in February, although remaining well above policymakers’ target.

Inflation is a measure of how quickly prices are rising or falling in the US economy.

related investment news

Economist Ed Hyman says it might be a good idea for the Fed to take a break from this financial shock


The Consumer Price Index, a key inflation barometer, rose 6% year-on-year in February US Bureau of Labor Statistics said Tuesday. The index takes into account price changes across a broad basket of consumer goods and services in categories such as energy, groceries, housing and entertainment.

The February value corresponded to the forecasts of the economists. It follows an annual gain of 6.4% in January and 6.5% in December and was the smallest 12-month gain since September 2021.

“It’s still high, of course,” said Mark Zandi, chief economist at Moody’s Analytics, of the annual inflation rate. “It’s slowly but steadily coming back.

“There are some good reasons to be optimistic that inflation will continue to fall next year.”

More from Personal Finance:
What two bank failures mean for consumers and investors
Here’s what you should know about FDIC-insured bank deposits
There is a faster and cheaper way to get into college, but few try it

A positive but falling inflation rate does not mean that consumer prices are falling; it signals that you are gaining weight more slowly.

Inflation is likely to be close to 3% by the end of the year, Zandi said. However, this estimate assumes that the US avoids a recession, which would rein in inflation more quickly but would trigger negative side effects such as rising unemployment. Fears of this so-called “hard landing” scenario have increased in recent days after banking sector defaults, although regulators are trying to contain the fallout.

Here’s What’s Driving February Inflation

House prices rose 8.1% last year, according to the BLS — which accounts for more than 60% of inflation after excluding food and energy prices, which can be volatile.

Other “notable increases” were motor insurance (up 14.5%), home and business (up 6.1%), new vehicles (up 5.8%) and leisure (up 5%). Grocery prices are up 10.2% and restaurants are up 8.4%. Energy prices increased by 5.2%.

Headline inflation has moderated from over 9% since the pandemic peaked in June, but remains higher than since the 1980s.

What are investors thinking about? Fighting inflation or risk of further turbulence in the banking sector?

“Pervasive inflation is a constant theme,” said Greg McBride, chief financial analyst at Bankrate.

“This is not limited to one or two categories or limited to discretionary spending,” he added. “It’s broad across categories that are absolutely necessary in the household budget.”

But it seems new car prices will ease as China reopens and supply chains normalize, Housing inflation is poised to slow and labor market wage growth is cooling — all of which should result in tamer inflation, Zandi said.

Inflation a by-product of supply, demand imbalances

Consumer prices started to rise rapidly in early 2021 as the US economy started to reopen after the pandemic shutdown.

The rise resulted from the dynamics of supply and demand, economists said.

Americans locked in their homes for a year unleashed a tide of pent-up demand and savings amassed by government relaxation and an inability to spend money on restaurants, entertainment, or vacations.

The rapid reopening disrupted global supply chains, a dynamic exacerbated by the war in Ukraine. In other words, the supply has not kept pace with consumers’ willingness to buy.

The failure of the SVB fueled fears of a ‘hard landing’.

Much of this is based on irrational fear.

Paul Ashworth

Chief Economist for North America at Capital Economics

The federal government stepped in on Sunday to allay concerns. Regulators halted uninsured consumer deposits at banks and offered short-term loans to other institutions hit by market instability.

“A lot of it is based on irrational fear,” Ashworth said of bank runs.

Inflation would fall more quickly in a “hard landing” scenario, but at the expense of an economic downturn, he said. One example of how that could play out is if consumers continue to withdraw deposits from banks, restricting banks’ ability to lend money, restricting lending to businesses, reducing hiring and confidence in the economy could affect the entire economy.

It’s too early to say whether the government’s efforts will boost consumer confidence and stem contagion, or whether irrational behavior will persist, Ashworth said. Here’s the inflation breakdown for February – in one chart

Sportsasff is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button