(AFP) – Consumer inflation in the United States remained stable at 2.4 percent in February, in line with market expectations, government data showed Wednesday, as affordability concerns persist in the world’s largest economy. The consumer price index (CPI) rose 2.4 percent year-on-year, the same increase as reported a month prior. The price index rose 0.3 percent month-on-month, also in line with market expectations. Price increases were reported in medical care, education, apparel, airline fares, and household furnishings, the US Labor Department said. Prices for used vehicles and vehicle insurance, communications, and personal care were down.
The core Consumer Price Index (CPI), which excludes volatile energy and food prices, rose 2.5 percent over last year in February. The fresh data was in line with market expectations, as per surveys of economists conducted by Dow Jones Newswires and The Wall Street Journal. The index for energy increased 0.6 percent month-on-month in February, following a 1.5-percent fall the previous month. Price shocks to global oil markets from the US-Israel war on Iran were not reflected in February’s figures, with the war launched on the last day of the month.
– Battered households –
February’s year-on-year inflation was near 12-month lows, but consumers in the United States continue to grapple with prices that have remained stubbornly high post-pandemic. US inflation hit a high of 9.1 percent in June 2022, and while it has dropped from those levels, years of elevated prices have battered households across the country. The US Federal Reserve, which has a dual mandate to address inflation and unemployment, raised interest rates to control flaring prices, and while it is now in a rate-cutting phase, they remain at elevated levels.
The new CPI figure will be a factor in the Fed’s discussion at a meeting to set rates next week. The Fed’s preferred price gauge, the Personal Consumption Expenditures (PCE) index, will be released later this week. The Fed has a long-term goal of two percent for US inflation but is also battling weakness in the labor market. The United States unexpectedly lost jobs in February while unemployment edged up, government data showed last week, piling pressure on President Donald Trump’s economic agenda as crucial midterm elections approach.
Affordability has been a key issue for Trump, and the weaker jobs numbers have turned up the heat on criticism of his economic policies. With the US-Israel war on Iran, global oil markets have seen prices spike, with traffic through the key Strait of Hormuz almost at a standstill and strikes on oil facilities across the region. That signals more inflation on the horizon for US consumers, with the national average price for a gallon of gasoline increasing by 22 percent in the last month, according to AAA.
– Asad HASHIM
© 2024 AFP
