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03/15/2024 |

Understanding The CPI Reading for February 2024

On Tuesday morning, the U.S. Bureau of Labor Statistics announced the Consumer Price Index Summary for February 2024.

Key Highlights For February CPI Numbers

  • CPI YoY: 3.2% vs. 3.1% est., Core CPI YoY: 3.8% vs. 3.7% est.
  • The consumer price index increased to 0.4% for the month and 3.2% from a year ago. The monthly measure aligned with expectations while the 12-month reading was slightly higher.
  • The core CPI, which excludes Food and Energy prices, rose 0.4% on the month and was up 3.8% on the year. Both were 0.1% points higher than forecast.
  • Energy costs were the main driver of the boost in the headline number, with an increase of 2.3%. Shelter increased by 0.4% while Food costs stayed flat.
  • This is the second month in a row of stronger-than-expected inflation numbers.

This is an image of a graph showing the year over year percent change of the US consumer price index as of February 2024.

CPI’s Effect On The Fed Rate Decision Next Week

While the 12-month rate is well off its 2022 peak of 9.1%, it does remain elevated and above the Fed’s 2% target. Expectations for a future rate cut have now shifted to June, as the consensus on the street is that the current numbers do not provide a suitable backdrop for a cut at this time.

The Market’s Reaction

Despite a relatively bullish initial reaction to the announcement during the premarket hours on Tuesday morning, markets began to slide by Wednesday and all three major indexes closed red on the week.

What Is CPI?

The Consumer Price Index (CPI) is a crucial economic indicator that gauges the average change in prices paid by consumers for a basket of goods and services over time. Let’s delve into the latest CPI reading for March 2024 to understand the current state of inflation and its implications for the economy.