by paul gomme and peter rupert
The BLS announced that the CPI in February rose 3.25% on an annualized basis. Year over CPI inflation was 2.43% up from 2.39% in the previous month. Our preferred trend measure was little changed at 2.68% compared to the previous month. Anticipation of the war appears to have pushed up oil prices in February which may account for the 11.1% (250% annualized) monthly increase in fuel oil.
The annualized core measure (ex food and energy) fell from 3.59% to 2.62%, year over year changed little coming in at 2.47% compared to 2.51% in the previous month. Our trend measure, 2.68% was little changed from the previous month’s 2.71%.
Drilling down farther, the CPI for services less rent on shelter shows a 3.34% increase in our trend measure, although the monthly number has come down from 4.25% in January to 3.43% in February.
The Fed continues to be in a bit of a pickle. While inflation is moving in the wrong direction, there are signs of weakness in the labor market. At this time, however, keeping inflation in check is job one for the Fed and we see no convincing argument for lowering rates in the near future.
