The S&P 500 hit a fresh record as investors shrugged off sticky inflation data

Warmer-than-expected February inflation was driven by two components: housing and gas.

The lodging index rose 5.7% on an unadjusted annual basis and 0.4% for the month, a decline from January's 6% annual increase and 0.6% monthly rise.

According to economists, sticky shelter inflation is largely responsible for high core inflation readings.

The rent index and Owners Equivalent Rent (OER) increased by 0.5% and 0.4% respectively on a monthly basis. Owners' Equitable Rent is the hypothetical rent a homeowner would pay for the same property. In January, the index for rents rose 0.4%, while OER rose 0.6%.

Seema Shah, chief global strategist at Prime Asset Management noted, “While core services inflation has warmed up again, all important core services weakened from last month, while accommodation inflation eased.”

Shah said the inflation trend is positive but price pressures will ease “very gradually”.

“This print is enough to keep rate cut expectations steady for June – but another print like this next month calls into question the story of a soft landing, pushing the first cut in the second half of the year,” the economist said.

Energy prices – largely responsible for the rise in core inflation – rose following months of declines fueled by gas prices. The index rose 2.3% in February after falling 0.9% in January. However, on a year-on-year basis, the index fell 1.9%.

Gas prices rose a remarkable 3.8% from January to February, after falling 3.3% the previous month. It is mostly seasonal and A pulling In American refining use.

Other indexes that rose in February included apparel, entertainment and used cars and trucks.

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The BLS noted that the airfare index rose 3.6% in February, following a 1.4% increase in January. The index for motor vehicle insurance increased by 0.9% month-on-month.

The food index rose 2.2% in February from last year, with food prices flat from January to February. The index for food at home was flat in the month after rising 0.4% in January.

However, food leaving the home rose 0.1% month-on-month after rising 0.5% in January.

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