CPI Rises The Expected 0.3 Percent In February, Details Very Unsettling

CPI Components Month-Over-Month

The BLS reports the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in February,

The BLS rounds to 1 decimal point. I show 2 decimal places

CPI Month-Over-Month

• All Items: 0.27 percent

• All Items Excluding Food and Energy: 0.22 percent

• Food and Beverage: 0.37 percent

• Shelter: 0.23 percent

• Owners’ Equivalent Rent: 0.22

• Rent of Primary Residence: 0.13

• Medical Care: 0.39 percent

• Medical Care Services: 0.61 percent

• Medical Care Commodities: 0.00 percent

• Energy: 0.63 percent

• Gasoline: 0.80 percent

• Food at Home: 0.44 percent

• Food Away from Home: 0.32

Other than shelter and its components (OER and Rent) this was a downright miserable report.

Since shelter is 35.612 percent of the CPI, it has an oversized weight on the CPI.

In contrast, the largest component of the PCE (the Fed’s preferred measure of inflation), is Health Care Services at roughly 18 percent of the PCE.

This jump in health care services is a prelude to what I expect when we have PCE data for January later this month.

I will do a separate report on health care later today.

CPI Month-Over-Month Energy, Gasoline, Utilities

Energy, Gasoline, Utilities and Fuel Month-Over-Month

• Energy: 0.63 percent

• Gasoline: 0.80 percent

• Utilities and Fuel: 0.47

These numbers are for February. The war in Iran was not even in play for those numbers.

CPI Year-Over-Year Percent Change

CPI Year-Over-Year Percent Change Details

• All Items: 2.4 percent

• All Items Excluding Food and Energy: 2.5 percent

• Food and Beverage: 3.0 percent

• Shelter: 3.0 percent

• Medical Care Services: 4.1 percent

• Utilities and Fuel: 5.6 percent

• Energy: -0.5 percent

Those year-over-year headline numbers matched the Bloomberg Econoday estimates.

The good news ends there.

I expect a rise in year-over-year CPI each month for the next three months. And that’s excluding energy and gasoline which hugely rates to add additional misery.

Unless we have a huge collapse in jobs, the Fed is not going to be cutting interest rates for a while.

Beneath the headline numbers, this data is a serious mess. The market expects the cut in June is now off the table. That’s been my expectation for quite some time.

Talk of tame inflation is nonsense, especially the Fed’s preferred measure. More reports on this coming up.

Addendum