The energy CPI jumped by 0.63% in February from January (+7.9% annualized). Gasoline prices jumped in February from January, even on a seasonally adjusted basis. The price of utility natural gas piped to the home spiked, as did prices of other fuels used at home, largely propane, heating oil, and firewood, amid a harsh winter in parts of the country. Electricity prices backed off for the second month from the spike that had topped in December.
Year-over-year, the energy CPI was up just a hair thanks to the 5.6% YoY drop in gasoline prices that is now in the process of flipping.
Food prices jumped by 0.44% in February from January (+5.4% annualized). Year-over-year, food inflation accelerated to 2.6%. Food prices are up by 31% from January 2020.
But prices of durable goods, many of which are imported, fell for the third month in a row and were nearly flat for two months before then. So year-over-year, the CPI for durable goods is now essentially unchanged, despite the tariffs. Durable goods are dominated by new and used vehicles.
Core services CPI rose by 0.27% (+3.3% annualized) in February from January, a deceleration from what had been the worst reading in a year. It accounts for roughly 60% of the CPI basket of goods and services.
It includes housing costs (OER and Rent), medical care services, health insurance, auto insurance, tenant’s insurance, subscriptions; telephone, internet, and wireless services; lodging, rental cars, airline fares, education, movies, sports events, club memberships, water, sewer, trash collection, motor vehicle maintenance and repair, etc. It does not include energy services, such as electricity.
Year-over-year, the services CPI rose by 2.9%, as it continues to be pushed down by the CPI for Owners’ Equivalent of Rent (OER), which had been doctored for the September-November period. OER is the biggest component of the CPI basket, weighing 26.1% in overall CPI, and over 40% in core services CPI, and it moves the needle.
The Bad-Joke OER explained.
Over the next few days, I will post separate detailed analyses on energy inflation, which intensified even before the current price spike in March, and on inflation for owners and buyers of cars and trucks. So stay tuned.
In case you haven’t seen it yet:
Food Inflation in America