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Wednesday, March 16, 2016

Consumer Price Index Up More Than Expected

The CPI core is showing pressure for a second month, up a higher-than-expected 0.3 percent in February with the year-on-year rate up 1 tenth to plus 2.3 percent and further above the Federal Reserve's 2 percent line.

Gains are once again led by health care with medical care up 0.5 percent for a second straight month which includes a 0.9 percent gain for prescription drugs. Shelter also shows pressure, up 0.3 percent as does apparel which is up 1.6 percent for a second straight sharp gain. Food rose percent 0.2 percent with the year-on-year rate at plus 0.9 percent.

Energy prices, which may be on the climb this month, fell a sharp 6.0 percent in February and pulled down the total CPI which came in at minus 0.2 percent with the year-on-year rate at plus 1.0 percent.

But it's not the total that Fed officials will be watching but the core which -- for a second straight month -- is signaling what policy makers want, that is upward pressure. This report isn't dramatic enough to revive much chance for a rate hike at today's FOMC but it will offer strong arguing point for the hawks.


Recent History Of This Indicator:
Pulled down by February's contraction for gasoline prices, consumer prices are expected to fall 0.3 percent with the core rate however doing better at a 0.2 percent gain. Service-based gains were widespread in January and similar strength in February would further point to price recovery for the economy.

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