Energy Prices Push Overall CPI Up 0.4 Percent in February

03/10/2021 12:00am

(This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.)

There is still little basis for concern about inflation in February’s data. As the economy opens more and pandemic checks are spent, we will see more bounce back in air fares, hotels, clothes, and other areas. But so far, there’s nothing to worry about.

  • The overall Consumer Price Index (CPI) is up 1.7 percent year-over-year. Core CPI is up just 1.3 percent.
  • Energy prices push the overall CPI up 0.4 percent in February, and the core up just 0.1 percent.
  • The energy index is up 3.9 percent, driven by a 6.4 percent jump in gas prices. This reverses declines seen at the start of the pandemic. Year-over-year indexes up 2.4 percent and 1.5 percent, respectively.
  • Part of the energy rise is due to growth in the economy worldwide, but some of it is driven by the temporary loss of manufacturing capacity in Texas due to weather. The latter will be reversed.
  • Inflation in most of the core remains well under control. New vehicle prices are flat after falling 0.5 percent in January, up 1.2 percent, year-over-year. Used car prices fell 0.9 percent, this is the fourth consecutive month of sharp declines.
  • Apparel prices fell again, dropping 0.7 percent in February, down 3.6 percent year-over-year.
  • Prescription drug prices fell 0.7 percent in February, down 2.7 percent year-over-year.
  • The car insurance index is up 0.7 percent after a 1.6 percent rise in January. This reflects more driving, but it is still down 2.8 percent year-over-year.
  • Airfares drop again in February, down 5.1 percent, and down 25.6 percent year-over-year. This will be reversed.
  • The medical care index is up 0.3 percent in February, and up 2.0 percent year-over-year. This is driven by a 2.0 percent rise in doctors’ fees, up 5.1 percent year-over-year.
  • Health insurance costs fell 0.4 percent in February, continuing a pattern of sharp declines, up just 1.0 percent year-over-year.
  • College tuition rose 0.2 percent in February, and up just 0.4 percent year-over-year. The big question is how tuition will change as in-person classes come back.
  • Owners’ equivalent rent is up 0.3 percent in February (actually 0.267), still up just 2.0 percent year-over-year. Rent proper is up just 0.2 percent, also 2.0 percent year-over-year.
  • Hotel prices fell again, down 2.3 percent in February, and 15.0 percent year-over-year.

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