US consumer prices in rise in February

US inflation rose above expectations in February, mainly driven by higher costs for petrol and housing, warning that prices are still sticky, which could have more negative impact on growing expectations for Fed’s first rate cut in June.

The US consumer price index increased 0.4% in February compared to 0.3% rise in January, while annualized CPI was up 3.2% last month, after rising 3.1% in January and beat forecast at 3.1%.

So called core inflation, which excludes the most volatile food and energy components, increased 0.4% last month after rising by the same margin in January and ticked above 0.3% consensus.

Year on year core CPI advanced 3.8% in February, marking the smallest annualized figure monthly increase in nearly three years, coming below January’s 3.9% rise, but beating 3.7% forecast.

The main contributors  to higher consumer prices, which add more than 60% to the monthly increase in the CPI, were petrol and housing.

The US inflation eased significantly  from its peak of 9.1% in June 2022, which provided tailwinds to Fed’s plans to start cutting rates, but progress has stalled in recent months, delaying initial plans to start easing monetary policy as early as March, with current 70% expectations for the first cut in June policy meeting.

The US central bank will continue to closely watch the most significant parameters before making any decision, with negative impact from elevated inflation, being partially offset by stronger than expected job growth and moderated wage growth, against higher unemployment.