(Headline USA) U.S. inflation slowed last month for the first time since September and a measure of underlying inflation fell to a four-year low.
The consumer price index increased 2.8% in February from a year ago, Wednesday’s report from the Labor Department showed, down from 3% the previous month. Core prices, which exclude the volatile food and energy categories, 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 greater than economists expected, according to a survey by data provider FactSet. Yet inflation remains above the Federal Reserve’s 2% target. And most economists expect inflation will remain elevated this year as Trump’s tariffs kick in.
The report “is encouraging news, though it doesn’t tell us much about where inflation is headed,” said Oren Klachkin, Nationwide Financial Markets economist, in an email. “With tariffs possibly set to push goods prices higher … we see inflation risks as tilted to the upside.”
On a monthly basis, inflation also came in much lower than expected. 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.
A sharp drop in air fares, which fell 4% just in February from the previous month, helped bring down overall inflation. Rental price increases also slowed and the costs of hotel rooms and car insurance rose much more slowly in February than the previous month. The price of new cars fell last month compared with January.
Grocery prices were unchanged last month from January, 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.
Avian flu has forced farmers to slaughter more than 160 million birds, including 30 million in January. Average egg prices hit $5.90 a dozen nationwide in February, a record high. The price had consistently been below $2 a dozen for decades before the disease struck.
How big an impact Trump’s tariffs will have on prices remains unclear, for now. The duties have roiled financial markets and could sharply slow the economy, and some analysts see the odds of a recession rising.
Adapted from reporting by the Associated Press
