JP Morgan Analyst Sees Inflation Easing, But Tougher Price Comparisons Loom For Key Categories

J.P. Morgan analyst Christopher Horvers said the Consumer Price Index (CPI) in February rose by 2.8% year-over-year, with core CPI increasing by 3.1%.

This marked a slight moderation compared to January’s inflation figures of 3% and 3.3%, respectively. Both headline and core indices saw a 0.2% month-over-month increase, underperforming the expected 0.3% rise, noted the analyst.

In February, significant pricing changes were observed across several categories. TV prices experienced deflation, dropping 8.7% year-over-year, a sharp contrast from the 6.6% drop the previous month.

Other categories such as Sporting Goods and Cosmetics also saw deterioration in prices, while some areas, including Appliances and Pet Food, experienced price increases.

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Notably, prices for Building Products flipped to inflation, rising 0.2% year-over-year vs. -0.7% last month.

On a sequential basis, some categories such as TVs and Sporting Goods showed declines in prices compared to the previous quarter, while others, including Pet Food and Toys/Games/Hobbies/Playground Equipment, saw pricing improvements.

Interestingly, Grocery prices remained relatively stable, with Food at Home inflation holding steady at 1.8% year-over-year, although Pet Food prices saw a slight uptick of 0.4%.

As the year progresses, comparisons in certain categories like Building Products and Pet Food are expected to ease, leading to potentially less inflationary pressure.

Meanwhile, more challenging comparisons are anticipated in categories such as Appliances, TVs, and Computers. The analyst notes that durable goods prices are stabilizing, with signs of improvement in categories such as food, electronics, and home furnishings.

This trend suggests that the strain on consumers’ wallets may be lessening, concluded the analyst.

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