Consumer prices rose 0.1% in February, matching January’s pace and the consensus forecast of market economists.
The year-over-year change in the consumer price index, however, slipped to 1.1% from 1.6%. Economists were expecting a slightly smaller drop to 1.2%.
Consumer prices excluding food and energy also rose 0.1% in February, matching January’s pace and the consensus estimate, while the year-over-year core inflation rate remained unchanged at 1.6%.
Medical care prices rose 0.3% in February, while owners’ equivalent rent climbed 0.2%.
“The big story is the apparent slowdown in owners’ equivalent rent, which alone accounts for 31% of the index,” says Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“OER rose 0.17% in February after a 0.20% gain in January, below the solid and accelerating prior trend of about 0.22-0.25% per month. But this is a technical effect; OER slows when utility costs rise. This effect will reverse in due course. The underlying pressure on rents is upwards.”
Many trades are benefiting from continued low inflation and status quo monetary policy, so any surprise in these data points in the next few months has the potential to alter the market landscape.
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