Consumer prices increased slightly in February due to higher rents and food costs, but prices in the U.S. are expected to slow or even decline in the coming months as the U.S. economy sees the effects of the coronavirus take hold.

As the virus continues to spread it will continue to halt manufacturing, interrupt supply chains and slow consumer demand. Prices in the short-term will fall according to economists, however, for how long and to what extent is unknown. Other geopolitical factors, such as the energy price war between Russia and Saudi Arabia last week, add additional uncertainty to the market. 

Headline CPI  in the U.S. increased by 0.1% in February, and year over year prices fell to 2.3% in February. Core CPI, or prices excluding oil and food prices, increased slightly more at 0.2%.   

These increases were pushed upward primarily by housing and food costs.

Rent increased by 0.3%, down slightly from the 0.4.% increase in January. Housing costs are driven by the demand in local areas and are not as susceptible to short term conditions or unexpected events like the coronavirus. 

“People may spend differently but they still need a place to live. So the demand is much more static than the demand for going to the movies or going to a basketball game or going to Disneyland,” said Russell Price, chief economist at Ameriprise Financial Inc.

Because of the way the virus is spreading, people distancing or isolating themselves from each other will put downward pressure on certain industries. 

Auto prices, which increased by just 0.1% in February, will likely fall along with demand, as will service industries that rely on people coming to their business. 

“We’ve seen it in every economy hit by the virus once people start to take the risk seriously. You know that they’re not out as much. They stop going to movies, they stop going to restaurants,” said Price. “And with weak demand, companies are going to fight for diminished market share by lowering prices.” 

As for February, overall food prices increased by 0.4% in February, with the food at home index rising 0.5% which was the largest monthly increase since May 2014. 

Conversely, food away from home increased by only 0.2%, down from January’s increase of 0.4%.  This is reflective of the changing patterns of behavior as people eat out less and stay home more. 

Over the next couple of months, potential disruptions to the food supply chain may start to increase food prices even more according to Christopher Low, chief economist at FHN Financial. 

However, Low believes that the collapse in shipping between the U.S. and China will also work to keep prices down as orders in meat, poultry and other items are unable to be shipped to China. 

Energy prices declined sharply in February, with a 2% decrease, this continues the trend from January in which Energy costs decreased by 0.7%. 

Fuel oil made up the largest decrease, falling 8.5% in February. Gasoline prices also fell significantly in February if less so than oil at 3.5%.  

The decreases are due to two main parts. 

Oil production has increased around the world as demand has fallen due to the coronavirus. However, the mild winter weather combined with strong supplies has also brought natural gas prices down to near-record lows according to Price.

Even businesses that would benefit from gas price decrease are hurting as the coronavirus’s impact reverberates across the economy.

Narinder Shergil has been a taxi cab driver in New York City for over 30 years. Normally falling gas prices would be good for business. However, Shergil said it doesn’t mean much if nobody is taking taxis.

“People are scared to travel,” he said. “At the airport, I’m waiting four hours for someone. Usually, it’s one hour max.” 

The airline industry is also facing a huge dilemma as it figures out how to survive in the time of the coronavirus. As demand has fallen, carriers have cut flights and slashed prices.

Fares fell 0.3% in February, however, as price indexes are often calculated towards the beginning or middle of the month, this figure is probably an underestimation. 

Some people are taking advantage of the low costs and booking trips.

Hali Riley, a mental health professional in New York, said she spontaneously booked two round trip flights, one to Paris in June and one to Greece in September, after finding tickets for under $250 each. 

Riley said she doesn’t see much difference between New York and France. 

“I’m literally smashed in tubes underground with millions of people every day, walking around with no health insurance anyways. Working in the same places. I might as well be drinking a bottle of wine in Paris,” she said.

As the world struggles to combat the spread of the coronavirus and markets fluctuate with uncertainty, the price changes in February tell us little about what the future will hold in the short term. 

But for Shergil, whose income depends on customers taking taxis, he is not sure how he will survive right now. 

“We are just hardly living,” he said.