February Inflation Data Hits the Mark for American Investors

American investors are rejoicing after figures released on Tuesday (March 13) showed US inflation was right on track in February. 

After January saw the consumer price index (CPI) jump 0.5 percent, February’s 0.2-percent increase comes as a sigh of relief. The news suggests that the US Federal Reserve may only hike interest rates three times this year.

The CPI did see slightly higher annual growth than the year before, however, as it rose 2.2 percent year-on-year in February compared to January’s 2.1-percent rise from the previous year.

Also bringing some comfort to investors was the core CPI, which excludes volatile food and energy prices, as its year-on-year increase was 1.8 percent. This increase had been reported in January, and as such, was anticipated by the market.

Some of the variables that impacted February’s CPI were a decrease in gas prices and hospital services, as gas prices dropped 0.9 percent last month. Meanwhile, the core CPI gained some balance from rent costs as owners’ equivalent rent of primary residence rose 0.2 percent.

With February’s inflation meeting the predicted targets, investors are hoping that the Fed won’t have to implement more than its three predicted interest rate hikes.

Earlier this month, concerns of an overheating market following comments made by newly instated Fed Chair Jerome Powell led buyers and analysts to believe that further hikes could be on their way, or could be coming faster than originally predicted.

These worries were only strengthened by February’s chaotic month for the Dow Jones Industrial Average (INDEXDJX:.DJI), which dropped over 3,200 points in the span of two weeks. Though the Dow’s tough month had a number of causes, including tariff worries and looming trade war potential, inflation uncertainty was one of the biggest concerns across the board.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.