By Chad Moutray, chief economist, National Association of Manufacturers
The Bureau of Labor Statistics said that the consumer price index (CPI) rose for the first time in four months, up 0.2 percent in February. This was largely due to higher gasoline prices, which increased 2.4 percent in February. To be fair, the price of regular gasoline remains 33.5 percent lower today than it was 12 months ago. Indeed, the average price of regular gasoline declined from $3.639 a gallon on June 23 to $1.982 a gallon on January 26, according to the Energy Information Administration. It then rose to $2.256 per gallon on February 23, and has since edged up to $2.347 this week.
Meanwhile, food prices increased 0.2 percent in February, with 3.0 percent growth over the past 12 months. Despite the higher overall figure for food, the data were mixed in February. Prices were higher for beef, eggs, fish, fresh fruits, juices, poultry and spices. In contrast, coffee, dairy products, fats and oils, fresh vegetables and pork prices were lower for the month.
Excluding food and energy, core consumer prices were also up 0.2 percent in February, and on a year-over-year basis, core inflation has increased 1.7 percent. That is up slightly from 1.6 percent in January. There were notable prices increases in February, including for apparel, household furnishings, medical care, new vehicles, shelter expenses and transportation services.
Yet, it continues to reflect core pricing growth of less than 2 percent, which is the Federal Reserve’s stated goal. In fact, core CPI has consistent been below 2 percent for 25 straight months, having last exceeded that threshold on February 2013. As such, pricing pressures have remained mostly in-check, freeing the Fed to pursue accommodative measures. This will be true even when the Federal Open Market Committee begins to increase short-term rates in the coming months.
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