CPI Manages to Escape Deflation

The CPI rose by 0.2% on a seasonally adjusted basis in the month of February. The CPI’s core rate, excluding food and energy, was also up by 0.2%.

Tuesday’s report was slightly higher than expectations. Bloomberg and Dow Jones both had estimates of 0.2% on the headline CPI and 0.1% on the core CPI.

On a year-over-year basis, consumer prices were up by 1.7%. This is still under the 2.0% to 2.5% that the Federal Reserve is currently hoping for, but at least it is not much lower.

As a reminder, the FOMC’s recent message indicated that the Fed is expecting inflation to remain very soft for longer than expected. The members also lowered their growth forecasts and their path to raising interest rates further as well.

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