Wells Fargo: US February’s CPI Presented No Surprises

Data released on Thursday showed inflation in the US reached in February the highest level since 1982. Although the magnitude and drivers were largely as expected, inflation continues to rage at a pace deeply unsettling for consumers and policymakers alike, explained analysts at Wells Fargo.

Key Quotes:
“For the first time in what seems like a long time, the February CPI presented few surprises. Both the headline and core printed in line with consensus expectations, rising 0.8% and 0.5%, respectively”.

“What’s more, the drivers of February inflation were more or less expected. Food, energy and core services all came in strong, but core goods inflation moderated, consistent with some recent improvements in inventories and supply chain woes”.

“But that should not detract from the fact that inflation continues on at a blazing pace, with prices up 7.9% over the past year and at an 8.4% annualized rate the past three months. Consumers and policymakers remain in a deeply uncomfortable state as a result.”

“While food and energy have dominated inflation discussions of late, the core index continues to be the FOMC’s guiding light on its price stability goal. In February, the CPI ex-food and energy rose 0.5%”.

“This was a modest slowdown from the 0.6% reading in January, but it was in line with the 0.5%-0.6% monthly readings that have prevailed for the past several months.”

“The recent surge in commodity prices stand to push inflation even higher. With core inflation already running well-ahead of the Fed’s goals, we look for the FOMC to kick off a series of rate hikes at its meeting next week.”