UBS Economics-US Economic Perspectives _February CPI recap Inflation slow...-114054292

ab12 March 2025Global ResearchUS Economic PerspectivesFebruary CPI recap: Inflation slowsHeadline CPI +0.22%: 12-month inflation slips to 2.8%
The headline CPI increased 22bp (seasonally-adjusted) in February — a little below our slightly-below-consensus expectation (UBS Econ projection +0.27%, UBS Big Data +0.27%, Bloomberg consensus average +0.30%).
Today's increase marked a swing towards slowing for the headline CPI at both the monthly and 12-month frequency. Since June monthly headline CPI increases have been on a notable upward trend with last month's January increase reaching 47bp. The February 22bp increase marks a notable slowdown from that January pace and is well below the 40bp increase in February last year. The 12-month change in the CPI had also risen in recent months — from 2.44% in September (its 3½ -year low) up to 3.00% in last month's January CPI report. In today's release for February, 12-month CPI inflation edged down to 2.82%.
Prices for food (+0.16% in February, +2.61% over the past 12 months) and energy (+0.20% in February, -0.17% over the past 12 months) both rose moderately and kept the headline and core CPI increases close to each other in February.
Food away from home prices were essentially unchanged in February (+0.01% seasonally adjusted) — a notable downward surprise compared to the strength in last month's CPI and weekly Nielsen grocery store data. Nonetheless, egg prices, which have received a lot of press recently, continued to rise strongly (up another 10% in February) though the USDA reports that wholesale eggs prices have been falling since the start of the March.
Food away from home, which we tend to put a fair amount of weight on as we think it is one of the best categories for tracking the current inflation trend, rose 0.39% in February — one of the strongest readings in recent months. The February reading was well above its 28bp pre-pandemic trend, though smoothing through recent readings food away from home prices are consistent with a bit above-target, but slowing, inflation.Core CPI +0.23%: 12-month core inflation falls to 3.12%
Core CPI prices rose 23bp seasonally-adjusted in February — an increase that was below both consensus and our expectations (UBS Econ projection 0.28%, UBS Big Data 0.25%, consensus average 0.29%).
Like with headline CPI, today's core CPI reading showed slowing at both the monthly and 12-month frequency.The core CPI slowed to a 23bp increase in February from the surprisingly large 45bp increase in January (seasonally adjusted). On a not-seasonally-adjusted basis the February increase was near the upper end of the range that prevailed in the pre-pandemic years and well below the pace in recent years (Figure 3The not-seasonaly-adjusted core CPI increase in February was near the top of the pre-pandemic range ). In July, 12-month core CPI inflation hit 3.17% — which had been its lowest point since March 2021, and since then it has been running a bit above that pace with last mo