(News Nation) – Inflation slowed during President Donald Trump's first month in office, but that progress could be short-lived as tariffs Threatening to raise prices Over the next few months.
The consumer price index rose 2.8% in February from a year ago, the first slowdown in annual inflation since September. According to new dataFrom the Labor Department.
Core inflation, which excludes volatile food and energy categories, fell to 3.1% year-on-year, the lowest since April 2021.
The February inflation report was better than expected, but it doesn't say much about where prices are heading given the uncertainty surrounding it. Trump's Trade War.
“The broader imposition of tariffs represents the risk of rising inflation in the coming months,” Bankrate Chief Financial Analyst Greg McBride said in a statement.
Lydia Boussour, a senior economist at Tax and Consulting Firm EY, is also looking forward to the speed bumps in the future.
“Tax and trade policy disruptions and strict immigration policies mean that inflation risks are leaning upside down,” Boussour said. Written in analysis.
The prices that rose and fell in February are as follows:
What's more costing?
- egg:
- For 1 year ago: +58.8%
- From 1 month ago: +10.4%
- Sporting event tickets:
- For 1 year ago: +12.0%
- From 1 month ago: +7.2%
- coffee:
- From 1 year ago: +6.0%
- From 1 month ago: +1.8%
- shelter:
- For 1 year ago: +4.2%
- From 1 month ago: +0.3%
Egg prices are a New record high In February, it rose 10.4% from last month, to $5.90 for a large number of large eggs. Compared to a year ago, egg prices have risen by nearly 60%.
There is an outbreak of bird flu Main driver As a producer, “egg spray” is forced to kill millions of egg-selling chickens to prevent spread. Increased demand around the upcoming Easter Holiday could potentially boost prices even further.
Recent Agriculture SectorAnnounced a billion dollar plan It will address rising egg prices, including additional funding for biosecurity measures and economic relief for farmers. The Trump administration is also considering importing millions of eggs from overseas.
Coffee prices also rose last month, up nearly 2% since January and 6% from a year ago. Part of this is due to low production of important coffee growth countries like Brazil. Reuters reported last week.
How much does it cost?
This is the price that is falling:
- Airline fares
- From 1 year ago: -0.7%
- From 1 month ago: -4.0%
- Peanut Butter
- From 1 year ago: -4.8%
- From 1 month ago: -2.7%
- Sports goods:
- From 1 year ago: -5.3%
- From 1 month ago: -2.2%
- gasoline:
- From 1 year ago: -3.1%
- From 1 month ago: -1.0%
Airline fares plummeted 4% in February, cutting overall inflation. Airfares have been down 0.7% from a year ago.
Part of the decline is due to weaker consumer demand. Like major airlines delta, Southwest Airlines and American Airlines Recently, we have lowered our quarterly revenue forecasts on concerns that consumers are pulling back.
Earlier this week, Southwest announced That checked baggage will break from decades of practice that distinguished airlines from rivals and will no longer fly freely.
What about housing costs?
Shelter costs rose 0.3% in February, accounting for almost half of the overall increase that month. This is an indication that rising housing costs are a major factor in sticky inflation.
The good news is that CPI's shelter index has improved over the past year. Shelter inflation fell to 4.2% per year in February, the lowest level since December 2021.
“The housing shelter component of the consumer price index remains strong by 4.2%, but has steadily weakened over the past two years,” said Lawrence Yun, chief economist at the National Association of Realtors (NAR). said in a statement.
The expansion of the shelter is aDelay indicatorHome cost changes may take up to six months or more for them to appear in monthly CPI data.
Mortgage rates have recently fallen after rising to 7% to start the year. The average rate for fixed mortgages for 30 years fell to 6.63% last week. According to Freddie Mac.
How does this affect interest rates?
That's the Federal Reserve system Not expected We will cut interest rates at next week's meeting, Wednesday's inflation report It's unlikely to change that.
For Americans, that means rising interest rates on car loans, credit cards and mortgages are probably here for now.
Added uncertainty around Trump's tariffs – And still cooling A resilient labor market – Two reasons why the Fed will likely remain in standby mode.
- Greg McBride, Bankrate's Chief Financial Analyst: “The Federal Reserve will remain firmly planted on the sidelines at next week's meeting. Inflation measures should show sustained progress to 2%. Recent economic uncertainties will require increasing data dependence in the coming weeks and months.”
- Lydia Boussour, Senior Economist at EY: “The combination of still-occurring inflation and resilient labor market conditions will continue to hold the Fed on hold at the FOMC meeting on March 18-19.”
- Lawrence Yun, Chief Economist of the National Association of Realtors (NAR): “Inflation needs to move convincingly towards 2% before the Federal Reserve considers another cut in the short-term Fed fund ratio.”
