Consumer inflation was generally in line with forecasts last month, per the latest Consumer Price Index (CPI). Overall, inflation rose 0.4% in February, with the annual reading declining from 6.4% to 6.0%. Core CPI, which strips out volatile food and energy prices, increased 0.5% while the year-over-year index decreased from 5.6% to 5.5%.

What’s the bottom line? The shelter index increased 8.1% over the last year, which accounted for over 60% of the total increase in all items less food and energy per the Bureau of Labor Statistics. However, shelter costs have been coming down in more real-time data. For example, Apartment List’s latest Rent Report showed that year-over-year rent growth decelerated to 3% in February, the lowest level since April 2021. Once these moderating shelter costs are reflected in the CPI data, they should add additional downside pressure to inflation.

And while inflation remains elevated, it has declined one-third from the high of 9.1% seen last June. Since lower inflation typically helps both Mortgage Bonds and mortgage rates improve, these signs of easing inflation are welcome.