From the Wall Street Journal:
"Inflation eased in February but remained stubbornly high, presenting a challenge for the Federal Reserve as it confronts how to slow the economy with higher interest rates at the same time it moves to stem banking problems.
"The consumer-price index, a closely watched inflation gauge, rose 6% in February from a year earlier, down from a 6.4% gain the prior month, the Labor Department said. It was the smallest increase since September 2021. When excluding volatile food and energy costs, prices advanced a slightly slower 5.5%. Economists view so-called core prices as a better indicator of future inflation.
"Monthly data showed price pressures persisted in many corners of the economy. Core prices increased by a seasonally adjusted 0.5% in February, the largest monthly gain in five months. Shelter costs rose 0.8% over the month, matching the largest monthly gain since the 1980s.
"Economists said Tuesday’s consumer-price index report underscored the urgency of the Fed’s inflation fight. Several said they thought it made officials more likely to raise rates next week by a quarter percentage point as long as the banking sector didn’t appear to come under additional stress ahead of its rate decision."
The story notes that "the inflation report showed prices for airfare and lodging also rose in February. Gasoline and food prices both increased last month, but at a slower pace than in January. Consumers paid less last month to heat their homes, and prices for medical services and used cars also fell."
- KC's View:
What I'm hearing this morning is that the banking crisis may prompt the Fed to either not raise interest rates next week or raise them less than it otherwise might have, which could end up being good for the stock market.
I keep thinking about what Andrew Ross Sorkin said recently on CNBC: Sometimes good news is bad news. Sometimes bad news is good news. Bad news often is bad news. And rarely, good news is good news.
So, what are these new inflation numbers? Who knows?