Key Takeaways From the US CPI Report for February

Here are key takeaways from the US February consumer price index report released Wednesday:

• Both the headline and core CPI gauges came in as expected, with a 0.3% month-on-month increase in the overall measure and a 0.2% rise in the index excluding food and energy prices. The biggest monthly advance in energy costs since September helped explain the faster headline figure.
• On a year-on-year basis, the CPI gauges are essentially showing the tamest inflation since the cost-of-living surge began in the spring of 2021. The headline CPI was up 2.4%, a touch above last year’s low, while the core held at 2.5% — matching the lowest since 2021.
• Economists highlighted that the figures are a snapshot of prices before the impact of the Iran war, which has sent gasoline and other energy prices soaring. They also cautioned that the other major monthly inflation measure, the PCE, looks to be running relatively hot. Elements of the February CPI that carry through to the PCE suggest a monthly core reading of at least 0.4% — a pace inconsistent with the Federal Reserve’s 2% annual target – even before the inevitable Iran war effects to come.
• Shelter and services prices showed modest increases in February, while furniture and apparel prices had signs of tariff pass-through. Car insurance, which has soared over the past several years, showed the smallest year-on-year gain since 2021. Health insurance prices were also down.
• Treasury yields hit session highs after the release, though moves were modest. Two-year and 10-year yields were up about 3 basis points as of 9:10 a.m. in New York. S&P 500 futures were down 0.2%. The Bloomberg Dollar Spot Index was up 0.2%.

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