Core CPI (which excludes food and energy prices) increased 0.22% month over month in February, in line with expectations. The year-over-year rate edged down to 2.46%.
Let’s take a closer look at Goldman Sachs Research’s breakdown of the latest data.
The rent and owners’ equivalent rent (OER) components slowed to 0.20% (vs. 0.23% in January), as the official CPI housing measures continue to catch down to the pace of new lease rent growth.
The medical services component rose 0.6%, boosting the core by 5 basis points and partially reflecting increases of:
Apparel prices rose 1.3% month over month, the fastest sequential pace since September 2018 and boosting the core by 3 basis points.
Education and communication goods prices declined 3% and weighted on the core by 3 basis points, partially reflecting a 5% decline in smartphone prices.
Core services excluding rent, OER, and airfares inflation was 0.31%, below both its January pace of 0.39% and its average pace of 0.60% in 2025 (excluding October and November).
However, some of the goods components that receive more weight in core PCE than core CPI increased sharply in February, potentially reflecting some residual seasonality.
Of note, the software component increased 6.5%. The Bureau of Labor Statistics and Bureau of Economic Analysis do not seasonally adjust software inflation, which has increased by about 3% month over month in each of the prior two Februarys.
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