February 2015 Consumer Price Index

Prices paid for consumer goods and services moved higher in February 2015 according to the Bureau of Labor Statistics.  The uptick of 0.2 percent was the first increase since October 2014.  However, the year-over-year change remained slightly deflationary, decreasing 0.1 percent.  Looking at the core measure by removing food and energy, the monthly change matched the prior acceleration of 0.2 percent, and its year-over-year tally increased to 1.7 percent from 1.6 percent a month earlier.

Notable changes in various categories led the indicator higher.  After pulling the price index lower for seven consecutive months, energy costs rose 1.0 percent in February compared to collapsing 9.7 percent in January; gasoline prices rose 2.4 percent during the month.  Food prices rose 0.2 percent in the period.  Most of the uptick was from more expensive restaurant bills as food away from home increased 0.3 percent versus 0.1 percent for food at home.  Other consumer products with relatively large increases during February include used vehicles (up 1.0 percent), medical commodities (0.3 percent higher), and shelter (an increase of 0.2 percent).

Inflation does not appear to be accelerating quickly.  Our central bank is targeting a consistent annual price increase of 2.0 percent.  Our economy has fallen short of this goal in the aftermath of the financial collapse.  With the exception of just 10 consecutive months in 2012, year-over-year core CPI has been perpetually below their preferred level, including being under this mark in every month since March 2013.  The uptick of 0.1 percentage points from 1.6 percent to 1.7 percent is the second consecutive increase for this price measure, but it hardly supports an argument for inflation causing the Federal Reserve to hike the overnight interest rate any time soon.     (by C. Cox)