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US consumer prices fell again in February due to low prices for energy. However, this does not mean a long-term trend. There are signals that inflation pressure accelerates as situation in labour market steadily improves, and growth of economy becomes stronger.
According to data released in previous week, seasonally adjusted CPI that includes prices for all goods and services fell in February by 0.2%. Given indicator preserves such dynamics since November.
However, main pressure still came from prices for energy. Looking at core CPI that does not include volatile prices for food and energy rose in February by 0.3%. Positive impact came from growth of prices for home rent, services, and healthcare sectors.
Basing on these factors, it can be said that the nearest inflation outlooks are mixed. Retail sales rose only by 1% year-over-year as situation with oil market slightly restrained a growth. From the other side, core CPI rose by 2.3%, the strongest growth since May 2012.
Inflation remains moderate. Fed inflation index (calculated with PCE) is at 2%. This means economy continues to grow, but it’s not overheated. PCE rose in January by 1.3% year-over-year. Core PCE rose by 1.7%.
Prices for energy fell in February by 6% against January and by 12.5% year-over-year. Prices for petrol fell by 13% in February and nearly by 21% year-over-year. At that time, prices for other goods continue to grow. Prices for food rose by 0.2% month-over-month and by 0.9% year-over-year.
Home rent and mortgage payments rose by 0.3% month-over-month and by 3.3% year-over-year. Cost of medical rose by 0.5% against January and by 3.9% year-over-year.
Average weekly earnings with inflation adjustment fell in February by 0.5%. Given reduction is a result of shorter working time per week. Average hourly earnings remained unchanged.