Inflation: February 2024, as reported on 3/12/24.
February 2024’s monthly CPI was 0.4%, replacing February 2023’s monthly 0.4%. Through rounding, this caused the annual rate to increase from 3.1% to 3.2%.
Inflation Projection: Over the past 12 months, the monthly CPI has been 0.3%. If this trend continues, below is where inflation will be by January 2025.
Total CPI: The annual CPI is a rolling product of 12 monthly data points. Think of it as being like 12 dominoes; as a new one comes on, the oldest one falls off. In February 2023, the 0.4% dropped off and was replaced by February 2024’s 0.4%. This caused the annual CPI to increase from 3.1% to 3.2%. The upcoming March 2024 annual CPI will likely increase as March 2023’s 0.1% falls out and is potentially replaced by 0.3% (the monthly average for 2023).
Food: Continues to improve as older monthly tall bars from late 2022 fall off. Starting in March 2024, further improvements will stop.
Energy: For February, the February 2023 monthly figure was <0.6%>, and it was replaced by 2.3%. As a negative number replaced a positive one, the annual energy CPI increased. Looking forward, the monthly energy CPI numbers are negative. This will not bode well for reducing inflation.
Core CPI: Core represents 77% of all CPI. Within this, shelter is the largest component, representing 32% of all consumer expenditures. Core improved slightly as the older bar fell off. Core will likely improve over the next 3 months as the months that will roll off are above the 0.3% average.
SHELTER: Core Shelter comprises nearly a third of the CPI. It should continue to improve as the older tall blue bars fall off, especially for the upcoming months of March through May.
Medical Services: October 2022 was the last tall positive bar. Decreases in Medical Service prices have been a major contributor to the overall CPI improvement, but that stopped in November as the negative totals from late 2023 started dropping off. Annual Med CPI will continue to rapidly increase.
New Cars: The slowdown in new car prices continues to contribute to the overall CPI improvement. The very tall green spikes are a thing of the past.
Used Cars: The contribution to overall CPI improvement from used car prices will slow as the negative figures from older months continue to fall off in April and May. There will be substantial improvement.
Bill Knudson, Research Analyst LANDCO ARESC