The U.S. Bureau of Labor Statistics reported the consumer price index increased (+0.4%) in February, a slight deceleration from the (+0.5%) in January, but well above the (+0.1%) in December and (+0.2%) in November. Over the last 12 months, the all-items index is up (+6.0%) before seasonal adjustment as compared to (+6.4%) in January. This marks the eighth straight month of a cooling in the annual inflation rate since it peaked at 9.1% in June. The index for shelter was the largest contributor to the monthly all items increase, accounting for nearly 70% of the monthly reading. The shelter index increased (+0.8%) in February. The indexes for food (+0.4%), recreation (+0.9%), household furnishings (+0.8%), airfares (+6.4%), motor vehicle insurance (+0.9%), apparel (+0.8%) and new vehicles (+0.2%) all saw increases. The energy index decreased (-0.6%) as both the natural gas (-8.0%) and fuel oil indexes (-7.9%) saw significant declines. The indexes for used cars and trucks (-2.8%) and medical care (-0.5%) also declined. Core CPI inflation rose (+0.5%) in February, up slightly from (+0.4%) for the previous month. The annual rate of core CPI inflation is now at 5.5%, down slightly from 5.6% in January. The shelter index is up (+8.1%) year over year and accounts for over 60% of the total increase in Core CPI.

The Commerce Department reported advance U.S. retail and food services sales fell 0.4% to $697.9B in February. January’s reading was revised higher to (+3.2%) from a previously reported (+3.0%). Retail sales which are adjusted for seasonal shifts but not inflation were up (+5.4%) year over year. Total sales for the December 2022 through February 2023 period were up (+6.4%) year over year. Sales decreased across multiple categories - led by department stores (-4.0%), home furnishings (-2.5%), restaurants (-2.2%), auto dealers (-1.8%), and miscellaneous retailers (-1.8%). Gasoline station sales dropped (-0.6%) reflecting lower oil prices. Internet retailers (+1.6%), health and personal care (+0.9%), and grocery stores (+0.6%) all saw increases. Excluding autos and gasoline, sales were up (+1.0%) for the month. Excluding autos, sales increased (+0.9%). Core retail sales, a measurement that excludes spending on autos, gasoline, building materials, and food services increased (+0.5%) in February, this follows January’s upwardly revised (+2.3%).

The U.S. Census Bureau reported housing starts increased 9.8% to a seasonally adjusted annual rate of 1.450M units in February, down (-18.4%) from a year ago. Single-family housing starts which account for the largest share of homebuilding increased (+1.1%) to a rate of 830K units, down (-31.6%) from a year ago. Starts of five units or more increased (+24.1%) to a rate of 608K units, up (+14.3%) from a year ago. New residential building permits, a proxy for future construction, rose (+13.8%) to a seasonally adjusted rate of 1.524M units. New residential building permits are running (-17.9%) below their February 2022 level. Single-family permits were up (+7.6%) from January’s revised 722K, down (-35.5%) from a year ago. Multifamily permits increased (+24.3%) to 700K. Leading the increase in building permits was the West (+30%), followed by the South (+10.9%) and Midwest (+9.6%). Only the Northeast saw a decline (-2.8%). Single-family housing completions at 1.37M, were (+1.0%) above January’s revised reading, while multifamily completions were up (+44.6%) to 509K. The number of houses approved for construction but not yet started was unchanged at 294K units, with the backlog for single-family housing dropping (-3.0%) to 130K. The inventory of single-family housing under construction fell (-1.7%) to a rate of 734K units.