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U.S. Inflation Stable in February

Posted by Joseph Trevisani on Mar 13, 2018 12:54:59 PM

U.S. consumer inflation was essentially unchanged in February with the monthly core and overall figures falling while the annual numbers were stable or slightly higher.

The consumer price index and its core version declined last month as expected. The CPI gauge slipped to 0.2 percent from 0.5 percent in January and the core measure decreased to 0.2 percent from 0.3 the prior month, reported the Labor Department on Tuesday.

Annual inflation rose slightly in February to 2.2 percent from 2.1 percent and the core index, which excludes food and energy costs, was unchanged at 1.8 percent for the third straight month.


 annual cpi mar 13-1.png

Core CPI

 core cpi mar 13


Both yearly inflation gauges argue against any long term pickup in consumer prices. The core gauge is at the lower end of the 2.3 percent to 1.6 percent range of the last six years with the 12 month moving average of 1.775 percent the lowest annual average in 28 months.

The general CPI index present a different case. The index has risen sharply over the last three years from a low of -0.2 percent in April 2015. But the extremely rapid decline in consumer prices in the seven months prior to that April, from 1.68 percent in October 2014 was largely caused by the collapse in crude oil prices.

The price of a barrel of West Texas Intermediate, the U.S. standard, fell 72 percent in the 21 months from June 2014 to February 2016, from $107.26 to $26.21, dragging the consumer price index down with it. The index has recovered in parallel with the return of oil prices. The current 12 month average of 2.04 percent is not far from the mid-point in the 3.34 percent 0.13 percent range of the last six years.


wti maer 13


This quiescent inflation report makes it very likely that the Federal Reserve will raise the Fed Funds rate 25 basis points to 1.75 percent at the FOMC meeting later this month.


Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Thompson/Reuters


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