Weakness in the guts of Tuesday’s U.S. inflation report suggests the real inflation scare, at least for central bankers, may be the prospect of softening price pressures, rather than the fears of an acceleration that gripped Wall Street last month.

So-called “procyclical inflation,” which denotes changes in the prices of goods and services that in the past have tended to be more sensitive to labor-market conditions, moderated in February to the lowest level since December 2015, according to data from the Labor Department report compiled by Bloomberg. (Federal Reserve Bank of San Francisco economists popularized the term in recent research.)

Housing rents were at the forefront of the deceleration, but club membership dues and fees, television and radio service subscriptions, prescription drugs, sporting goods and hotel rates put big dents in the procyclical basket.

Core inflation, which includes all items except food and energy, ticked up to 1.85 percent from 1.82 percent despite the underlying deceleration in procyclical inflation. Large jumps in the price indexes for so-called “acyclical” items like apparel, motor vehicle insurance and household operations -- a category that includes things like moving expenses and repair of household items -- helped support it.

Federal Reserve officials forecast inflation will get close to their 2 percent target this year as low unemployment puts upward pressure on wages, and ultimately, on prices. Inflation unexpectedly decelerated in the first half of 2017 -- despite a strong job market -- after briefly popping above 2 percent at the start of that year, and a big decline in the price of cell-phone service last March has been a favorite culprit of policy makers.

Core services inflation excluding cell phones, however, declined in February to the lowest level since August 2015.

source: Bloomberg