US consumer inflation still elevated but Fed under stress

A woman shops in a supermarket as rising inflation affects consumer prices in Los Angeles, California. — Reuters

By AFP

Published: Tue 14 Mar 2023, 5:15 PM

US consumer inflation edged down in February but remains elevated, according to government data released Tuesday, adding pressure to the Federal Reserve as it mulls further rate hikes to cool prices.

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The consumer price index (CPI) rose six percent from a year ago, below January's figure and in line with expectations, according to Labor Department data.

But even though this was the smallest annual rise since September 2021, the level remains well above policymakers' longer-term two per cent goal.

"The index for shelter was the largest contributor... accounting for over 70 percent of the increase," said the Labour Department in a statement.

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Between January and February, the CPI rose 0.4 per cent, slowing from the month prior as well.

The US central bank has been on an aggressive campaign to tame inflation, raising interest rates eight times since early last year to ease demand.

While Fed Chair Jerome Powell initially said that the central bank is prepared to increase the pace of rate hikes if necessary as economic data runs hot, the collapse of Silicon Valley Bank last week and New York-based Signature Bank may complicate its efforts.

The implosion marked the biggest banking failures since the 2008 global financial crisis, leaving the Fed in a tough position as it tries to battle inflation without adding to an ongoing rout of some banking stocks. — AFP

AFP

Published: Tue 14 Mar 2023, 5:15 PM

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