After January’s surprised upside shift, expectations have been adjusted up over the last month for another sizable MoM move in headline CPI. But that was not enough as the 0.4% MoM rise in the headline (as expected – highest since August) lifted CPI YoY up to +3.2% (hotter than the 3.1% exp)…

Source: Bloomberg

The 3-month annualized CPI rate was rose to 2.8% from 1.9%. The 6-month annualized core rate dropped to 3.2% from 3.3%.

Energy costs surged MoM as Core Services inflation slowed MoM…

Source: Bloomberg

Full CPI MoM breakdown:

The index for all items less food and energy rose 0.4 percent in February, as it did the previous month.

• The shelter index increased 0.4 percent in February and was the largest factor in the monthly increase in the index for all items less food and energy.
• The index for rent rose 0.5 percent over the month, while the index for owners’ equivalent rent increased 0.4 percent.
• The lodging away from home index increased 0.1 percent in February, after rising 1.8 percent in January.
• The airline fares index rose 3.6 percent in February, following a 1.4-percent increase in January.
• The index for motor vehicle insurance increased 0.9 percent over the month.
• The medical care index was unchanged in February after rising 0.5 percent in January.
• The index for hospital services decreased 0.6 percent over the month and the index for physicians’ services decreased 0.2 percent.
• The prescription drugs index fell 0.1 percent in February.
• The index for dental services was among those that rose in February, increasing 0.4 percent.
• The index for personal care fell 0.5 percent in February, following a 0.6-percent increase in January.
• The household furnishings and operations index fell 0.1 percent over the month, as did the new vehicles index.
• Among other indexes that rose in February were apparel, recreation, and used cars and trucks.

Full CPI YoY breakdown:

The index for all items less food and energy rose 3.8 percent over the past 12 months.

• The shelter index increased 5.7 percent over the last year, accounting for roughly two thirds of the total 12-month increase in the core CPI index
  • Feb Shelter inflation: 5.74% down from 6.04% in Jan
  • Feb rent inflation: 5.77%, down from 6.09% in Jan

• Other indexes with notable increases over the last year include motor vehicle insurance (+20.6 percent), medical care (+1.4 percent), recreation (+2.1 percent), and personal care (+4.2 percent).

Core CPI rose 0.4% MoM (hotter than the +0.3% exp) and up 3.8% YoY (hotter than the +3.7% exp), but still the lowest since April 2021…

Source: Bloomberg

The 3-month annualized Core CPI rate was rose to 4.1% from 3.9%. The 6-month annualized core rate rose to 3.8% from 3.5%.

Core Goods actually rose MoM for the first time since June 2023…

Goods deflation continues (-0.3% YoY) but has flattened out, while services inflation remains stubbornly high at +5.2% YoY…

Source: Bloomberg

And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.5% MoM up to 4.5% YoY – the hottest since May 2023…

Source: Bloomberg

While SuperCore CPI slowed MoM, there was a large jump in Transportation Services MoM…

Source: Bloomberg

Finally, we note that consumer prices have not fallen in a single month since President Biden’s term began (July 2022 was the closest with ‘unchanged’), which leaves overall prices up 19% since Bidenomics was unleashed. And prices have never been more expensive…

Source: Bloomberg

That is an average of 5.6% per annum (more than triple the 1.9% average per annum rise in price during President Trump’s term).

So, about that shrinkflation – did companies only ‘get greedy’ when Biden took office?

But it gets worse, real wage growth has lagged significantly for the average joe in America…

Source: Bloomberg

Despite a very modest decline in Feb, Food costs are up over 21% since Biden’s term began, but non-supervisory wages are up only 18%.

Bidenomics for the win!

Are we going to see a replay on the ’70s?

Source: Bloomberg

The market narrative of slow and steady disinflation just broke harder.

…or are we still set for a massive wave of depressionary deflation?