Inflation charge rose by 2.8% in February, CPI report reveals. Here is what which means for worth aid.
Inflation in February rose 2.8% on an annual foundation, barely decrease than economists had forecast however persevering with to sign that worth hikes stay elevated regardless of the Federal Reserve’s efforts to tame inflation to a 2% annual charge.
By the numbers
The Shopper Worth Index was forecast to rise 2.9% final month, in line with economists polled by monetary information agency FactSet. The CPI, a basket of products and companies usually purchased by shoppers, tracks the change in these costs over time.
February’s information comes after inflation accelerated in January, when it rose 3% on an annual foundation
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What economists say
The report reveals “additional indicators of progress on underlying inflation, with the tempo of worth will increase moderating after January’s robust launch,” stated Kay Haigh, international co-head of fastened revenue and liquidity options in Goldman Sachs Asset Administration.
Regardless of the lower-than-expected inflation, the Federal Reserve remains to be more likely to maintain off on slicing charges at its March 19 assembly, Haigh famous. “[The] mixture of easing inflationary pressures and rising draw back dangers to development recommend that the Fed is transferring nearer to persevering with its easing cycle,” Haigh stated.
Grocery costs are persevering with to rise, with groceries rising 2.6% in February from a yr earlier, the CPI report stated. The continued rise of meals prices is making a monetary pinch for a lot of households, economists be aware.
Egg costs had been a driver of final month’s grocery inflation, with the price of eggs leaping 58.8% from a yr earlier, the report stated. Espresso rose 6% on an annual foundation, whereas restaurant meals jumped 3.7% from a yr in the past.
Meals inflation has been “regularly accelerating since mid-2024, reaching virtually 5% on a 3-month annualized foundation” in January, in line with Morgan Stanley economists in a March 6 analysis be aware.
Different gadgets that noticed worth hikes in February embrace automotive insurance coverage, which rose 11.1% on an annual foundation, and medical care, which rose 3% from a yr in the past.
In the meantime, President Trump’s tariff barrage has the potential to spice up costs for a lot of merchandise, from meals imports to cars, including to an unsure outlook for inflation, economists say.
“Excellent news on inflation, however excellent news pre-tariffs,” stated Robert Frick, company economist with Navy Federal Credit score Union. “Sadly, three predominant ache factors for client budgets — shelter, medical care and automotive insurance coverage — had substantial will increase.”
What it means on your cash
Though the inflation information got here in lighter than anticipated, worth will increase are nonetheless pacing effectively above the Fed’s 2% annual objective. Due to that, economists say it is unlikely the Fed will minimize charges at its assembly subsequent week.
Which means shoppers and companies will proceed to face increased borrowing prices for longer, whereas nonetheless grappling with elevated worth hikes, economists say.
“The Federal Reserve will stay firmly planted on the sidelines at subsequent week’s assembly,” Bankrate Chief Monetary Analyst Greg McBride stated on Wednesday. “Inflation readings nonetheless want to point out sustained progress towards 2%, and the current financial uncertainty will make them ever extra data-dependent within the coming weeks and months.”
