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Economic News

US Consumer Prices Still Running Hot

March 12, 2024
Francis Généreux
Principal Economist


  • The US consumer price index (CPI) increased 0.4% in February after a 0.3% bump in January. Excluding food and energy, the gain was still 0.4%, as it was in January.
  • The all items index rose 3.2% for the 12 months ending in February, up slightly from 3.1% in January. Meanwhile, core inflation ticked down from 3.9% to 3.8%.


Inflation is proving hard to quash. That said, some of February's monthly advance in headline CPI is due to an expected upsurge in energy prices, which gained 2.3% in February. That's the biggest increase since August 2023 and was mostly due to a 3.8% rebound in gas prices after a four-month-long slide. In contrast, food prices leveled off (0.0%). This is the first time they haven't gone up since April 2023.

As in January, the biggest disappointment was sticky core CPI, which strips out food and energy. The month-on-month gain was expected to come in slightly below January's disappointing 0.4%, but instead it remained unchanged. In fact, it turned out to be twice as high as the consensus forecast of 0.3%. However, when we look at today's data more closely (to the second and third decimal places), there was still some slight improvement: Monthly core CPI growth slipped from 0.392% to 0.358%.

It's nevertheless clear that the February increase in core CPI didn't just come from services. After eight consecutive months of declines, goods prices excluding food and energy edged up 0.1%. Among other things, there were price gains in apparel (+0.6%) and used cars and trucks (+0.5%). Some of the rise in the price of goods may have been due to higher shipping costs. But the annual change in the goods component, excluding food and energy, is still negative (-0.3%).

One bright spot is that the price of services other than energy cooled after heating up in January. The monthly change went from 0.7% to 0.5%, which remains high but is still better than it was. The slowdown in owners' equivalent rent (0.4% in February, down from 0.6% in January) is particularly noteworthy. In addition, the price of medical care shed 0.1%. However, airfares climbed once more, posting a monthly gain of 3.6%. All told, despite falling from 5.4% to 5.2%, services inflation excluding energy for the 12 months ending in February was still too high. It will have to slow even more for headline inflation to get closer to the 2% target and stay there over the long-term.


The recent inflation trajectory in the United States has been somewhat disappointing. Core CPI has been especially sticky month-on-month. Fed officials will definitely need to see a sharper drop in prices over the next few months, otherwise they won't feel comfortable cutting rates in late spring. We'll get a better idea of what's to come at the next meeting, which will be held on March 20.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.