The Consumer Price Index (CPI) rose +0.2% (+2.2% Y/Y) in February, down from January’s +0.5%   (+2.1% Y/Y)   increase.   Overall energy costs were up +0.1% with drops in gasoline (-0.9%) and fuel oil (-3.6%) balanced by increasing prices for piped gas (+4.7%) and electricity (+0.4%). Similarly, a -0.2% drop in prices for food at home balanced a +0.2% increase in food away from home to keep overall food prices unchanged for the month. Stripping out food and energy, core CPI was up +0.2% (+1.8% Y/Y), with drops in the prices for new vehicles (-0.5%), used vehicles (-0.3%), and medical care commodities (-0.3%), and increases for apparel (+1.5%), transportation services (+1.0%), and shelter (+0.2%).

Retail sales dropped -0.1% in February, widely missing an expected +0.3% increase, and marking the third consecutive monthly decline, although despite the recent slowdown yearly sales were up +4.0%. Sales dropped significantly for motor vehicles (-0.9%) and gas stations (-1.2%), and stripping out those components brought sales up +0.3%, with gains for building materials (+1.9%), sporting goods/hobbies (+2.2%), and nonstore (i.e. online) retailers (+1.0%), more than offsetting sales losses at department stores (-0.9%) and furniture stores (-0.8%). On a yearly basis, sales increased notably at nonstore retailers (+10.1%), gasoline stations (+7.9%), miscellaneous retailers (+7.5%), and dropped only at sporting goods/hobbies retailers (-3.5%).

Industrial production was up +1.1% (+4.4% Y/Y) in February after January’s downwardly revised -0.3% slowdown. Increases in oil and gas extraction pushed mining activity up +4.3% and manufacturing rose +1.2% with increases in motor vehicles (+3.9%), computers (+1.5%), and furniture (+1.9%), and decreases in petroleum and coal products (-2.8%) and electrical equipment and appliances (-0.8%). Warming temperatures contributed to a -4.7% fall in production for utilities with electricity dropping -3.3% and natural gas down -13.8%. Industrial capacity utilization rose from 77.5% to 78.1%, it’s highest rate since January 2015, but is still -1.7% below long run capacity utilization average.