PREVIEW: What to Look for in the February Consumer Price Index

03/08/2021 12:00am

(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Wednesday, March 10th at 8:30 AM Eastern Time.)

There is widespread concern that President Biden’s rescue package, along with the containment of the pandemic, could lead to inflationary pressures. While we would not see any effect from the Biden rescue package in February, and the pandemic was still far from contained in the month, we are likely to see some impact from the economic rebound.

Most obviously, we should see a further jump in the energy index, and especially the index for gasoline prices. This is due to increased demand for oil worldwide, and also from the temporary loss of refining capacity in Texas due to the storms last month.

The energy commodities index rose 7.3 percent in January, after rising 5.1 percent in December. Gas prices rose slightly faster, going up 7.4 percent in January and 5.2 percent in December. In spite of these sharp rises, the indices are still, respectively, 8.7 percent and 8.6 percent below their year-ago levels. February will make up much of this gap, but prices may fall back some with the Texas refineries fully on-line.

Another sector where we may see some bounce back in prices is auto insurance. Auto insurance prices plunged in the beginning of the recession, as less traveling meant less accidents. The index rose 1.6 percent in January but is still 3.7 percent below its year-ago level. Airfares and hotel prices are still far below year-ago levels — 20.3 percent and 11.4 percent, respectively — but we probably will not be seeing any notable rebound in these prices in February.

CEPR produces same-day analyses of government data on inflation, employment, GDP and other topics. 
Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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