US CPI data for February shows the annual inflation has remained sticky during the month. Today, on March 14 at 8:30 A.M. Eastern Time ( 6 pm IST), the US inflation data for February was released by the US Bureau of Labor Statistics (BLS).
The US annual inflation rate fell to 6% in February 2023 after falling for eight consecutive months, which was the lowest level since September 2021. The number, which compares to 6.4% in January, was in line with market expectations. The food index increased by 9.5%, while the energy index rose by 5.2%. Moreover, core inflation dipped from 5.6% to 5.5%. The CPI increased by 0.4% over the previous month, following a 0.5% increase and also meeting expectations. With a contribution of almost 70%, the index for shelter was the main driver of the increase. Contrary to expectations, the core rate increased slightly from 0.4% in January to 0.5%.
The focus now shifts to the US Fed and task for Fed officials becomes more challenging. Although Fed Chief Powell sounded hawkish in his last week’s Congressional testimonies, the next move by the Fed amidst the changing financial environment will be keenly watched by the markets.
On the back of the SVB crisis and higher rates negatively impacting the financial health of several US regional banks, there is already growing pressure on the US Fed to go slow. Some industry experts are of the view that the US Fed should pause rate hike now while some expect the central bank to hike the rate by 25 bps and not 50 bps as some others expect. Market will have to wait till the next Fed’s FOMC meeting on March 21-22 and the decision on rate hike gets announced on March 22.
Meanwhile, small business owners remain doubtful that business conditions will get better in the coming months. The NFIB Small Business Optimism Index increased 0.6 points in February to 90.9 but remains below the 49-year average of 98. 28% of owners reported inflation as their single most important business problem, up two points from last month. Owners expecting better business conditions over the next six months deteriorated two points from January to a net negative 47%.