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February CPI report strong U.S. inflation HousingWire

Consumer prices rose in February, casting doubt on inflation hitting the 2% target, impacting mortgage rates and rental prices.

The Consumer Price Index experienced another increase in February, casting doubt on the sustainability of inflation moving back to the 2% target. Data from the Bureau of Labor Statistics revealed that consumer prices rose by 3.2% from the previous year, up from 3.1% in January. The monthly increase in February was 0.4%, following a 0.3% rise in January, surpassing economists' expectations of 0.1% to 0.2%.

Despite the rise in inflation, it is not expected to impact the upcoming Federal Open Market Committee meeting, where no rate cuts are anticipated. Core inflation, the preferred gauge for the Federal Reserve, decreased to 3.8% annually, down from 3.9% in January, while the target for core inflation remains at 2%.

Shelter and gasoline prices were the main contributors to the increase in the index for all items in February, with shelter inflation easing to 0.4% from 0.6% in January.'s chief economist, Danielle Hale, noted a 5.7% increase in shelter prices over the year.

Federal Reserve Chair Jerome Powell reiterated during his recent testimony that interest rate cuts will not be implemented until inflation is under control. Mortgage rates have slightly decreased following the anticipation of the CPI data release, with the average 30-year fixed rate for conventional loans at 7.08% on Tuesday.

In January, the median rent in the U.S. continued to decline for the sixth consecutive month, according to's rental report. Hale emphasized the importance of improving asking rent to address the housing shortage and eventually lead to a decrease in shelter inflation.

The BLS updated the weighting method for owners' equivalent rent (OER) in the CPI in January 2023, adjusting unit-level weights to account for structure-type differences in owned homes. This new method aims to better reflect rental markets nationwide but may introduce monthly variability in the unit-level weights.

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