MNI DATA IMPACT: US February CPI +0.1%; Core Up +0.2%>

--CPI +2.3% yoy; Core CPI +2.4% yoy 

--Energy -2.0%; Food +0.4%

By Brooke Migdon

     WASHINGTON (MNI) - The Consumer Price Index for February increased 

steadily by 0.1% as surging food prices and steadily rising shelter 

costs offset plummeting energy prices, according to a Bureau of Labor 

Statistics report released Wednesday.   

     The increase in headline CPI was higher than market expectations 

that had projected overall inflation to remain unchanged in February as 

the spread of COVID-19 weakened demand. Core CPI came in as expected, 

rising 0.2% in February. 

     Here are some of the key takeaways: 

     - Energy prices fell -2.0%, driven by a decrease in motor fuel 

(-3.3%) and gasoline (-3.5%). Energy prices spiraled in February as 

industrial production halted in China due to widespread factory and 

business shutdowns as the government attempted to contain the 

coronavirus. Prices should post similar weakness in the coming months 

after OPEC and Russia shifted from seeking production cuts to flooding 

the market this week, resulting in some of the largest single-day 

declines in crude oil prices. 

     - Food prices rose 0.4% in February after increasing 0.2% in 

January. Food at home rose 0.5% in the month, its largest gain since 

May 2014. However, the American Farm Bureau's chief economist told MNI 

this week that food prices will likely weaken next month as the 

coronavirus slows demand in critical U.S. export markets like China, 

one of the world's top importers of soybeans. CPI excluding food was 

flat in February. 

     - The relatively large owner's equivalent rent category, accounting 

for 24% of the total CPI basket, posted a 0.2% gain in February, slowing 

marginally from a 0.3% increase in January. MNI interviewed the chief 

economist at the National Multifamily Housing Council earlier this week 

who said that rent prices have consistently outpaced the wages of all 

private sector employees, and demand shortages will continue to drive 

prices higher. But recession fears stemming from the economic 

uncertainty created by the coronavirus could reduce demand for larger 

investments like apartments, potentially weakening prices in the near 

-term.  

      - Medical care prices rose 0.3% for the third consecutive month, 

led by gains in physicians services (0.2%). Prices of medical equipment 

fell by 0.3% in February after declining by 0.8% in January.  

     - Other notable gains came from apparel prices, which grew 0.4%, 

personal care products (1.1%), used cars and trucks (0.4%) and education 

(0.3%).  

       ** MNI Washington Bureau: 202-371-2121 ** 

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