Inflation fell for the eighth straight month in February as prices fell in key categories.
Prices rose 6 percent annually, up from 6.4 percent the previous month, according to the Labor Department’s Consumer Price Index (CPI) released on Tuesday.
Eggs, which have risen to record high prices, have seen one of the biggest price declines over the past month, a welcome relief to struggling shoppers.
Nonetheless, inflation in food, housing and various services continues to run hot, raising the question of when these categories will finally stop rising.
“Today’s CPI report shows that the inflation rate may take longer to reach the 2 percent target than markets expected,” said Sinem Buber, ZipRecruiter’s chief economist, in a statement.
Egg prices, used cars, energy fall
According to Tuesday’s report, the price of eggs fell 6.7 percent in the past month, reversing massive gains in recent months. But egg prices remain 55.4 percent more expensive than a year ago.
Egg producers have blamed the price hikes on an outbreak of bird flu, which forced farmers to kill millions of chickens, reducing the supply of eggs. More than 58 million birds have been affected by the outbreak as of January 2022, according to the Centers for Disease Control and Prevention.
Wholesale egg prices have plummeted in recent months, but consumers aren’t seeing the full discount. That has drawn complaints from Democratic lawmakers accusing egg producers of price-gouging.
The price of used cars and trucks fell 2.8 percent in February, down 13.6 percent annually.
Used car prices have fallen for eight straight months after supply chains were in turmoil and high demand pushed prices to record highs. That trend may not continue as wholesale prices for used cars rose 4.3 percent in February, according to a report by Cox Automotive released last week.
A handful of other goods and services are also finally getting cheaper.
Energy costs fell 0.6 percent in February, driven by an 8 percent drop in utility costs. Over the year, ancillary costs have risen by 14.3 percent.
Medical costs, meanwhile, fell by 0.7 percent for the second month in a row.
Other prices will not stop rising
Food prices, which are up 10.2 percent year-on-year, rose 0.3 percent last month.
Baked goods were up 0.7 percent, seafood was up 1.5 percent and frozen fruits and vegetables were up 4.5 percent.
Household goods rose 0.5 percent in February and 10.4 percent year-on-year.
Continued price hikes have fueled massive gains for food and consumer goods companies like General Mills, Nestlé and Kraft Heinz Co.
While these companies have seen their sales decline recently as customers are turning to cheaper alternatives, they haven’t announced any plans to cut prices.
Rents are still rising
Most of February’s inflation was driven by rising rents, which rose 0.7 percent month-on-month.
Services, which the Federal Reserve monitors closely to decide whether the economy needs further cooling by further rate hikes, rose 0.6 percent.
Silicon Valley Bank’s new CEO urges customers to return Saudi Arabia with plan to buy up to 121 Boeing jets
“Inflation within core services linked to wage demands continues to rise, so the economic rationale for rate hikes continues to flash red,” RSM chief economist Joe Brusuelas said in a note.
Transportation services saw one of the biggest jumps, rising 1.1 percent in February and 14.7 percent annually.
Auto insurance was another key contributor, rising 0.9 percent for the month and 14.5 percent year-on-year. The insurance industry has pointed to an increase in drivers on the road following the pandemic, higher rates of fatal accidents and the cost of repairing vehicles.
Copyright 2023 Nextstar Media Inc. All rights reserved. This material may not be published, broadcast, transcribed or redistributed.