United States Inflation February 2019

United States

United States: Inflation cools again in February

March 12, 2019

Consumer prices increased 0.2% over the prior month in February, accelerating from the flat print recorded in January and matching market expectations. The figure marked the first month-on-month uptick in four months and was primarily driven by higher costs for food and energy, which rebounded on crude oil gains and consequently higher prices at the pump. On the other hand, core consumer prices—which exclude volatile items such as food and energy—rose 0.1% in February, down from January’s 0.2% increase, and weighed on by falling prices for new and used vehicles, and medical care, particularly for prescription drugs.

Inflation eased to 1.5% in February from 1.6% in January, dragged down by a significant drop in the volatile energy index due to falling gasoline and fuel costs. Meanwhile, core inflation—a closely watched indicator for forecasting future monetary policy moves—edged down to 2.1% in February from 2.2% in January.

February’s results signal that core PCE inflation, the Federal Reserve’s preferred price gauge, could track below its 2.0% target if underlying inflation continues softening. Nevertheless, wage pressures driven by a tight labor market and signs that some of February’s weakness could be temporary suggest inflation may not yet be on a downward trend. Regardless, the report could give the Fed additional confirmation to maintain its wait-and-see approach before its next rate hike, which the majority of FocusEconomics panelist currently have penciled in the second half of the year.

FocusEconomics Consensus Forecast participants expect inflation to average 2.0% in 2019, which is unchanged from last month’s forecast. For 2020, the panel also expects inflation to average 2.2%.


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United States Inflation Chart

United States Inflation February 2019

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Bureau of Labor Statistics.

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