Inflation fell for the eighth straight month in February as key categories saw their price drop.
Prices rose 6 percent annually, down from 6.4 percent the previous month, according to the Labor Department’s Consumer Price Index (CPI) released Tuesday.
Eggs, which have seen their price soar to record levels, saw one of the largest price drops last month, a welcome relief for beleaguered shoppers.
Still, inflation continues to run hot for groceries, housing and various services, raising the question of when those categories will finally stop rising.
“Today’s CPI report indicates that the inflation rate may take longer to reach the 2 percent target than markets were anticipating,” ZipRecruiter lead economist Sinem Buber said in a note.
Price of eggs, used cars, energy falling
The price of eggs fell 6.7 percent last month, according to Tuesday’s report, reversing massive gains in recent months. But egg prices remain 55.4 percent more expensive than they were one year ago.
Egg producers have blamed the price hikes on an outbreak of bird flu that forced farmers to kill millions of hens, reducing the supply of eggs. The outbreak has impacted more than 58 million birds since January 2022, according to Centers for Disease Control and Prevention.
The price of used cars and trucks fell 2.8 percent in February, bringing the annual decline to 13.6 percent.
Used car prices have fallen for eight straight months after snarled supply chains and high demand drove prices to record levels. That trend may not continue, as wholesale used car prices rose 4.3 percent in February, according to a report from Cox Automotive released last week.
A handful of other goods and services are also finally getting cheaper.
Energy costs fell 0.6 percent in February, driven by an 8 percent dip in utility costs. On the year, utility costs are up 14.3 percent.
The cost of medical care, meanwhile, fell 0.7 percent for the second straight month.
Other prices won’t stop rising
Grocery prices, which are up 10.2 percent on the year, rose 0.3 percent last month.
Baked goods rose 0.7 percent, seafood rose 1.5 percent and frozen fruits and vegetables rose 4.5 percent.
Housekeeping supplies rose 0.5 percent in February and 10.4 percent on the year.
Persistent price hikes have helped food and consumer staple companies such as General Mills, Nestlé and Kraft Heinz Co. bring in massive profits.
While those companies have recently seen their sales figures dip as customers opt for cheaper alternatives, they haven’t announced plans to cut prices.
Rents are still rising
The bulk of February inflation was driven by rising rents, which jumped 0.7 percent on a month-to-month basis.
Services, which the Federal Reserve closely monitors to decide whether the economy needs to be cooled further by more interest rate hikes, rose 0.6 percent.
“Inflation inside core services, which are linked to wage demands, continues to rise, so the economic rationale for hiking rates continues to flash red,” RSM chief economist Joe Brusuelas said in a note.
Transportation services saw one of the biggest jumps, rising 1.1 percent in February and 14.7 percent annually.
Motor vehicle insurance was another key factor, rising 0.9 percent on the month and 14.5 percent annually. The insurance industry has pointed to an increase in drivers on the road post-pandemic, higher rates of fatal crashes and the cost of repairing vehicles.