Topline
Americans got much welcomed relief from inflation as the Consumer Price Index unexpectedly declined to 2.8% in February after reaching 3.0% in January following five consecutive monthly spikes, and in more good news, egg prices, the yardstick of the post-election inflation spike, dropped from over $8 per dozen at the start of March to around $5.50 this week, according to USDA data compiled by Trading Economics.
Key Facts
Egg prices, which soared nearly 60% from February a year ago and rose 12.5% in January, dropped sharply in March from over $8 a dozen at the beginning of the month to $5.51 on Tuesday, March 11.
In another positive sign, shelter costs rose 4.2% from a year ago on an unadjusted basis, the smallest annual monthly increase since December 2021.
The inflation rate for food at home was well under the overall CPI in February, reaching 1.9%, while restaurant prices continued to track above, rising 3.7%.
Energy prices dropped 0.2%, with both fuel oil and gasoline down 5.1% and 3.1%, respectively.
New car prices declined 0.3% and shoppers got a reprieve when buying televisions (-8.8%), computers (-6%) and smartphones (-13.7%), while prescription drug prices rose 4.6%.
Service prices remain a sticking point, with transportation services up 6%, recreation services, including cable, satellite and streaming television services, rising 4.3% and medical care services up 3%.
Background
The February CPI came in lower than experts expected and down from 3% in January. The inflation rate started to climb after dropping to 2.4% in September 2024, the lowest level since March 2021. The positive CPI news helped reverse the recent stock market decline. The S&P 500 ended up 0.5% and the Nasdaq 100 climbed 1.1% in yesterday’s trading, though the Dow Jones Industrial Average dipped 0.2%.
Core Inflation Reaches Lowest Level In Four Years
Core inflation, considered the best measure of overall inflation since it takes out more volatile food and energy prices, declined to its lowest level in four years. Core inflation dropped to 3.1% in February. It was at 3% in April 2021, then began its dramatic rise.
Producer Price Index Remains Unchanged From January
The February PPI, which tracks prices at wholesale, remained unchanged from January on a seasonally-adjusted basis. Unadjusted, wholesale prices rose 3.2% over the past 12 months. This is down from the 12-month increase of 3.7% in January and 3.4% in December, the Bureau of Labor Statistics announced today.
Tangent
The Conference Board reported that its Measure of CEO Confidence rose in the first quarter 2025 at the highest level seen over the past three years. Calling the improvement in CEO confidence “significant and broad-based,” Stephanie Guichard, senior economist at The Conference Board, reported all components of the Measure improved, including cyber threats, regulatory uncertainty, financial and economic risks, and supply chain disruptions. The sole exception was geopolitical instability, which remains a high-impact risk according to a majority of the 134 CEOs surveyed. The Measure also found a “notable increase” in CEOs expecting to increase investment plans and a decline in the share expecting to downsize investments.
Contra
The on-again, off-again Trump tariffs and their impact on prices remain a wild card. “It’s worth remembering that this may be the calm CPI report before the storm,” wrote Principal Asset Managements chief global strategist Seema Shah in a research note and warned the inflation picture “potentially getting uglier as the months go on,” as reported by NBC News.
Crucial Quote
“After hotter readings in December and January, flat producer prices for February should provide some assurances that inflation isn’t taking off again. But one month does not make a trend, and the upward pressure for goods costs (even excluding the outsized increase for eggs) is a warning sign that imposed tariffs could drive prices higher in coming months,” Ben Ayers, senior economist at Nationwide, shared with CNN.
Further Reading
US Wholesale Inflation Substantially Slowed In February (CNN, 2/13/2025)
Stocks Rise After CPI Surprise as Trade Risks Loom: Markets Wrap (Bloomberg, 3/12/2025)
Price Growth Cooled More Than Expected In February, Before Trump Ramped Up Tariffs (NBC News, 3/12/2025)
CEO Confidence Increased Sharply in Q1 2025 (The Conference Board, 2/20/2025)
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