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WASHINGTON—In February, U.S. consumer prices rose slower than expected, easing concerns about tariffs' inflation impact. The Bureau of Labor Statistics reported a 0.2% increase in the Consumer Price Index, bringing the annual inflation rate to 2.8%, down from a 0.5% rise in January.
Excluding volatile food and energy prices, the core CPI rose 0.2% in February, a 3.1% increase over the past year. Economists expected a 0.3% rise in both headline and core CPI, with annual rates of 2.9% and 3.2%.
Shelter costs, representing over a third of the CPI weighting, rose by 0.3%, accounting for about half of the monthly CPI increase. This measure, which reflects homeowners' estimates of what they could rent their properties for, also rose by 0.3%.
Food and energy prices rose 0.2%, while used vehicle prices jumped 0.9%. Apparel prices increased by 0.6%. Egg prices surged 10.4% in February, leading to a 58.8% annual increase. The overall food index, including meat and fish, was up 7.7% year-over-year, with beef prices climbing 2.4% last month.
Motor vehicle insurance increased 0.3% in February and 11.1% annually, while airline fares decreased 4% in February and 0.7% year-over-year.
According to a separate BLS release, inflation-adjusted average hourly earnings rose 0.1% in February and were up 1.2% from the previous year. While the Federal Reserve may welcome the cooling inflation rate, central bank policymakers remain cautious given the potential inflationary impact of President Donald Trump’s ongoing trade policies.
Trump’s 25% tariffs on steel and aluminum took effect Wednesday, prompting swift EU retaliation. He also imposed 20% tariffs on Chinese imports, adding uncertainty to inflation. While viewing tariffs as temporary inflation drivers, Federal Reserve officials warn that a prolonged trade war could cause entrenched price increases.
The latest inflation data comes at a time when economic growth is facing headwinds. The Atlanta Federal Reserve’s GDPNow tracker estimates that first-quarter economic growth will contract by 2.4%, marking the first negative quarter in three years.
