Inflation Progress Stalls as Housing Costs Continue to Rise

By Felix Richter – Statista

Inflation in the U.S. edged up slightly in February, as rising housing costs continued to put upward pressure on the Consumer Price Index, while an increase in energy prices compared to January also contributed to higher-than-expected overall inflation. According to the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) increased 3.2 percent over the last 12 months before seasonal adjustment, up from 3.1 percent in January, which was what economists had expected for February as well. On a monthly basis, prices edged up 0.4 percent with the indexes for shelter and gasoline alone accounting for more than 60 percent of the overall increase. Meanwhile core inflation, which excludes volatile food and energy prices, came in at 3.8 percent in February, down slightly from 3.9 percent in January and the slowest increase since April 2021.

Due to its weight in the Consumer Price Index, the cost of shelter continues to be a major driver of inflation. Rents and owners’ equivalent rents of residences increased 5.8 and 6.0 percent year-over-year in February, respectively, as the index for shelter climbed for the 46th consecutive month. In fact, excluding the impact of shelter, inflation would have stood at 1.8 percent last month, below the Fed’s target level of 2 percent.