US inflation rose 3.2% in February — yet another stubbornly high figure that won’t inspire the Federal Reserve to slash interest rates this spring.
February’s Consumer Price Index — which tracks changes in the costs of everyday goods and services — came in a tick higher than the 3.1% headline inflation figure economists surveyed by FactSet expected.
On a monthly basis, price growth edged 0.4% higher last month, driven primarily by the indexes for shelter and gasoline, which contributed to more than 60% of the advance.
Core CPI a number that excludes volatile food and energy prices slowed to 3.8% in February after advancing 3.9% in December and January.
The figure, a closely-watched gauge among policymakers for long-term trends, was slightly above the 3.7% figure economists at FactSet expected.
The latest inflation figures are apt to disappoint central bankers, who have been unsuccessful in tamping down inflation closer to their 2% goal, as well as investors who were banking on the first of three interest rate cuts to take place within the first half of the year.
Aside from shelter and gasoline, the Bureau of Labor Statistics attributed the CPIs increase to rises across airline fares, motor vehicle insurance, apparel and recreation.
The indexes for personal care and household furnishings, meanwhile, dropped.
The food index was unchanged in February, as was the food at home index, though the food away from home index rose 0.1% for the month.
Unlike the CPI, February’s jobs report said that the unemployment rate edged higher — a welcome sign that the economy is slowing.
The closely watched jobs report showed that the unemployment rate rose to 3.9%, breaking a three-month streak where the rate held steady at 3.7% an uptick that likewise will boost the Federal Reserves case for rate cuts in the coming months, which most traders are now pegging for June.
Still, US employers increase payrolls by a surprisingly strong 275,000 last month, according tot he Labor Department, blowing past the 198,000 job gains economists expected.
Also in February, the annual increase in wages edged up by five cents, to $34.57, after increasing by 18 cents in January.
Wage increases have historically been a key measure of infation as they’re attributed to higher inflation rates because the cost of goods and services rises as companies pay their employees more.
Recent data echoes what Fed Chair Jerome Powell told US lawmakers last week — that progress on lowering inflation is not assured.
He said that central bankers would like to see more data that confirm and make us more confident that inflation is moving sustainably down to 2% before reducing the policy rate.
The remarks come nearly rwo years after inflation peaked at a staggering 9.1% in June 2022, pushing Fed officials to begin a rate-hiking campaign that lifted the benchmark federal funds rate 11 times in 2022 and 2023, landing on its current 22-year high, between 5.25% and 5.5%, in July 2023.
Nonetheless, policymakers have been able to dodge a recession, which has been atributed to the healthy job market.
Even billionaire hedge fund tycoon Ray Dalio and JPMorgan CEO Jamie Dimon were wrong about their recession predictions.
In September 2022, Dalio — the founder of Bridgewater Associates, the world’s largest hedge fund — told MarketWatch that the US will likely slide into a recession in 2023 or 2024, citing the Fed’s interest rate hikes in its effort to curb inflation at the time.
Shortly thereafter — and as recently as November — Dimon also sounded the alarm on a possible recession, warning Wall Street of a so-called “hard landing” where the economy would rapidly decline, blaming “runaway inflation,” interest rates and the effects of Russia’s war in Ukraine during an interview with CNBC.
