Feb. U.S. CPI Steady at 2.4% Y-o-Y Despite Energy Surge

SECAUCUS, NJ (DTN) – U.S. headline inflation held steady in February as the Consumer Price Index (CPI) grew 2.4% year-on-year, matching January’s print and market expectations despite a surge in energy costs.

Core inflation, as measured by the CPI’s all-items less food and energy index, matched January’s expansion by increasing 2.5% year-on-year and in line with market expectations.

Despite the stability in both headline and core CPI, broader inflation itself has persistently remained above the Federal Reserve’s long-term target of 2% per annum, undermining  the central bank’s rationale for interest rate cuts.

The Fed, which relies more on the Personal Consumption Expenditures Index for its inflation readings, withheld a rate cut in January after a prior 25-basis point reduction in December, which brought rates to a range of 3.5–3.75%.

The February CPI data showed the energy index rising 0.6% over the month, a reversal from January’s 1.5% decline that pressured the overall index higher. For the 12 months ending in February, the energy index showed a modest increase of 0.2%.

The surge in February energy costs came as heating bills went up significantly for many consumers in the U.S. amid rallying prices of natural gas, the main component energy used during the winter. Both natural gas and crude oil prices have remained higher since the start of March, responding to the Iran war that has disrupted the global supply chain in energy.

By comparison, the food index rose by a more modest 0.4% in February but by a higher 3.1% for the year. The shelter index climbed 0.2% in February and 3.0% year-on-year.

On the heels of the latest CPI data, WTI crude oil for April delivery on NYMEX was up by $2.28, or 2.7%, at $85.73 bbl by 9:28 a.m. ET.