U.S. February Inflation Stabilizes as Expected, Soaring Energy Prices May Lead to Continued High Inflation in March

The U.S. Department of Labor reported Wednesday (March 11) that the Consumer Price Index (CPI) rose 2.4% from a year earlier in February—matching January’s reading and economists’ surveyed expectations. The core CPI, which excludes volatile food and energy costs, also climbed 2.5% year-over-year as forecast. However, U.S. benchmark crude oil futures have seen sharp volatility since the Iran conflict flared. This month’s average trading price stands at around $82 per barrel, up from roughly $65 in February. As a result, March’s inflation data could be even hotter. Joseph Brusuelas, chief economist at RSM, estimates a rule of thumb: every $10 increase in oil prices per barrel lifts the Labor Department’s inflation reading by about 0.2 percentage points. While calculations vary slightly among economists, most agree oil prices will push inflation higher in March. Economists also note that last year’s government shutdown left October housing cost growth data missing, artificially suppressing the current year-over-year inflation reading. But this downward distortion should vanish in the April inflation report, with the calculated rate rising accordingly.