U.S consumer prices rose moderately last month, at a slightly slower pace than in January.
The consumer-price index rose +0.2% in February after rising a seasonally adjusted +0.5% in January.
Ex-food and energy, the core prices rose +0.2%, compared to +0.3% in January.
Market expectations were looking for a headline print of +0.2%, and a +0.2% core print.
In the year to February, overall prices rose +2.2%, the largest annual increase since November, while core prices were up +1.8% on the year. The market was expecting a +2.3% increase in overall inflation and core prices to rise +1.9%.
Real average hourly earnings were flat last month and real average weekly earnings rose a seasonally adjusted +0.3% on the month.
Digging deeper, today’s report showed an index of energy prices rose +0.1% on the month, as gas and fuel oil costs both fell. The price index for new auto’s declined for the second consecutive month, falling -0.5%. Cloth prices rose +1.5% on the month and transportation services increased +1%.
Despite the slightly tamer inflations numbers, fed fund futures are pricing in a +88.8% chance of a +25 bps hike at next weeks FOMC meeting (March 20-21).
Note: Fed policy makers have penciled in three rate increases this year, and have been monitoring the inflation picture closely.
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