US consumer inflation eased to an annual 6pc rate in February as energy price gains slowed while shelter and services costs accelerated, signaling inflation remains elevated as the Federal Reserve weighs further rate hikes against a backdrop of recent instability in the banking system.
The consumer price index (CPI) in February slowed from an annual gain of 6.4pc in the prior month and a peak of 9.1pc in June, marking an eighth month of easing, the Labor Department said today. Core inflation, stripping out volatile food and energy, rose at a 5.5pc annual pace, down from 5.6pc in January.
Slowing but stubborn inflation comes as the Federal Reserve is expected to increase its target rate by a quarter point next week, although the collapse in recent days of Silicon Valley Bank and Signature Bank of New York following runs on deposits has prompted some economists as well as investment bank Goldman Sachs to project that the Fed will pause its rate hikes. Unexpectedly strong job growth and other data had prompted the Fed last week to suggest it might step up the pace of rate hikes to combat inflation.
On a seasonally adjusted basis, the CPI rose in February by 0.4pc from the prior month after a 0.5pc monthly gain in January. Core inflation rose by 0.5pc in February from a monthly gain of 0.4pc in January.
The energy index fell by 0.6pc on the month after a 2pc gain in January. On an annual basis, the energy index rose in February by 5.2pc after an 8.7pc gain in January. Gasoline fell in February by 2pc on the year after an annual gain of 1.5pc in January, while utility natural gas rose by an annual 14.3pc pace, slowing from 26.7pc in the prior month.
Costs of shelter, which accounted for 70pc of the overall increase in CPI, rose by an annual 8.1pc following a gain of 7.9pc in January. On a monthly basis, shelter costs rose by 0.8pc in February after a gain of 0.7pc in the prior month.
Prices for services less energy services, or so-called core services inflation, rose at an annual 7.3pc pace in February following a gain of 7.2pc in January, reflecting the stickiness of service price gains as Americans seek recreation and experiences after the loosening of Covid-19 restrictions.
Used vehicle prices fell by 13.6pc from a year earlier after January's decline of 11.6pc , while new vehicle prices rose at a 5.8pc annual pace for a second month.
The food index rose by 9.5pc after an annual gain of 10.1pc in January.
