Annual Inflation Hits Lowest Rate in Nearly 2-1/2 Years

American consumers paid more overall for goods and services for the first time in four months in February, according to government figures released Tuesday, March 3, 2019. Still, inflationary pressures were mostly modest for the month and annual inflation pegged in at the weakest rate in almost two-and-a-half years.

Energy prices advanced on the month for the first time since October while the cost of food climbed for a fourth month in a row. On an annual basis, inflation has been kept largely in check by cheaper gasoline.

U.S. consumer prices advanced 0.2% in February following three consecutive months of being unchanged, the Labor Department said in its monthly report on the Consumer Price Index. The CPI is a broad measure of what American consumers pay for everything from apples to airline fares.

In key pricing categories:

  • Prices at the pump moved up 1.5% after declines in January, December and November of 5.5%; 5.8%; and 5.2%. Gasoline prices fell 9.1% from a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, edged up 0.4% in February after three monthly drops of 3.1%; 2.6%; and 2.8%. Energy prices dropped 5% year-over-year.

  • Overall food prices for the month went up 0.4% after advancing 0.2% previously. Food prices increased 2% from a year earlier.

Excluding the more volatile food and energy components, so-called core consumer prices rose 0.1% in February after five straight gains of 0.2%.

"We view the risks to the inflation outlook as weighted to the downside as the domestic economy has slowed more quickly than we had expected," Reuters quoted Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Shelter or housing costs moved up 0.3% for a fourth month in a row, and their year-over-year increase rose to 3.4%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline figure, U.S. inflation over the 12 months ended February slowed to 1.5% from 1.6%, marking the lowest annual rate of inflation since September 2016.

Core inflation ran at 2.1% from a year earlier following three straight increases of 2.2%. The core annual rate is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

"The Fed is on pause for the foreseeable future," Sweet added.

The following table of key inflation figures is for the last nine months through February, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on March 12, 2019. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

August 2018 to February 2019 Consumer Prices – Gains & Losses in Percent

  Aug 2018 Sept 2018 Oct 2018 Nov 2018 Dec 2018 Jan 2019 Feb 2019 12 Month
All items 0.2 0.1 0.3 .0 .0 .0 0.2 1.5
  Food 0.1 0.1 .0 0.2 0.3 0.2 0.4 2.0
    Food at home .0 -0.1 -0.1 0.1 0.3 0.1 0.4 1.2
    Food away from home 0.2 0.2 0.1 0.3 0.4 0.3 0.4 2.9
  Energy 0.5 -1.0 2.1 -2.8 -2.6 -3.1 0.4 -5.0
    Energy commodities 0.6 -1.1 2.6 -5.0 -5.7 -5.3 1.5 -8.6
      Gasoline (all types) 0.5 -1.2 2.7 -5.2 -5.8 -5.5 1.5 -9.1
      Fuel oil 1.6 -0.7 3.2 -2.9 -9.4 -1.3 2.6 -2.4
    Energy services 0.4 -0.9 1.3 0.2 1.5 -0.5 -0.8 -0.6
      Electricity 0.3 -0.7 1.8 0.2 0.4 -0.6 -0.3 .0
      Utility (piped) gas service 0.7 -1.5 -0.5 0.2 5.1 -0.3 -2.4 -2.6
  All items less food, energy 0.1 0.2 0.2 0.2 0.2 0.2 0.1 2.1
    Commodities less food, energy -0.2 -0.1 0.3 0.2 .0 0.4 -0.2 0.1
      New vehicles .0 .0 -0.2 .0 .0 0.2 -0.2 0.3
      Used cars and trucks 0.5 -2.1 2.5 2.5 -0.5 0.1 -0.7 1.1
      Apparel -1.3 0.9 0.2 -0.6 .0 1.1 0.3 -0.8
      Medical care -0.3 -0.2 -0.1 0.5 -0.4 0.1 -1.0 -1.1
    Services less energy 0.2 0.3 0.2 0.2 0.2 0.2 0.2 2.7
      Shelter 0.3 0.2 0.2 0.3 0.3 0.3 0.3 3.4
      Transportation 0.1 0.5 0.1 .0 -0.1 -0.2 -0.1 1.1
      Medical care -0.1 0.3 0.2 0.4 0.4 0.3 .0 2.4

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for March and the latest annual period become public on April 10, 2019.

CPI data is used in calculating inflation rates and in this site’s U.S. inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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