Inflation a bit softer and some color

The February CPI rose by .2% headline and core with both one tenth below expectations. These are off .5% and .4% gains for each in January. The y/o/y gains are 2.8% and 3.1% respectively vs 3% and 3.3% in the month prior. Energy prices were up by .2% m/o/m and down .2% y/o/y. Food prices were higher by .2% m/o/m and 2.6% y/o/y with eating out driving the increase. ‘Food away from home’ prices were up .4% m/o/m and 3.7% y/o/y though ‘food at home’ saw no price gain m/o/m but up 1.9% y/o/y.

Services inflation ex energy prices grew by another .3% m/o/m and by 4.1% y/o/y. Owners’ Equivalent Rent rose .3% m/o/m, same pace seen in the prior month and 4.4% y/o/y. Rent of Primary Residence also was up .3% m/o/m and by 4.1% y/o/y. Medical prices were up by .3% m/o/m and 3% y/o/y. Health insurance in particular saw a .3% m/o/m price gain and by 3.9% y/o/y. As I said last month, show me any health insurance policy that was up by just 3.9% y/o/y rather than double digits. Anything related to your car remains pricey. Insurance prices rose .3% m/o/m after popping by 2% in January and they are up 11.1% y/o/y. Vehicle maintenance prices were also up .3% m/o/m and by almost 6% y/o/y. Maybe hinting at what the airlines have said over the past few days, airline fares fell by 4% after jumping in the two prior months and are flattish y/o/y. Hotel prices rose by .2% m/o/m and by 1.7% y/o/y.

Core goods prices continue to show signs of bottoming out, up by .2% after a .3% rise in January and are unchanged y/o/y. Used car prices continue to rebound, up by .9% m/o/m after a 2.2% gain in January and .8% increase in December. They are up just .8% y/o/y though. New car prices were down by .1% m/o/m and by .3% y/o/y. Apparel prices fell by 1.4% in January and were up by .6% in February m/o/m and by a similar amount y/o/y. Prices of stuff around the house (windows, floor coverings, furniture, bedding, appliances, etc…) saw a .2% m/o/m price gain but down by .4% y/o/y.