While the stock market continues to react negatively to U.S. tariffs being imposed by the White House, the volatility doesn’t seem to be spreading to the inflation rate, at least for now.
For the first time since September, U.S. inflation slowed and, according to a report from The Associated Press, a measure of underlying inflation dropped to its lowest in four years. Those statistics come just as the U.S. is adding tariffs to steel and aluminum imports.
The consumer price index increased 2.8% in February from a year ago, according to Wednesday’s report from the Labor Department. That’s down from 3% the previous month. Core prices rose 3.1% from a year earlier, down from 3.3% in January. The core figure is the lowest since April 2021.
The declines were larger than economists expected, according to a survey by data provider FactSet. Yet they remain higher than the Federal Reserve’s 2% target.
Consumer prices rose 0.2% in February from the previous month, down from a big 0.5% jump in January. And core prices rose just 0.2%, below the 0.4% increase in January. Economists watch core prices because they are typically a better guide to inflation’s future path.
Grocery prices were unchanged last month from January, according to the AP report, bringing some relief to consumers grappling with a 25% jump in grocery prices from four years ago. The cost of eggs, however, jumped 10.4% in February from the previous month and are nearly 60% more expensive than a year ago.
Federal Reserve Chair Jerome Powell said in January that rate cuts were on hold and another reduction is highly unlikely at the Fed’s next meeting.
