Americans were freed from inflation in February as prices rose at the slowest pace since last summer.
Consumer prices rose 2.8% in the 12 months from February to February, the Labor Bureau reported Wednesday that it was slower than the 3% increase from the previous year in January. Economists predicted that the Consumer Price Index (CPI) would increase by 2.9% from a year ago.
Core CPI, which excludes unstable food and energy prices, rose 3.1% compared to the previous year. This was a lower annual increase than consumers faced in January when core prices rose 3.3%. Economists had predicted a 3.2% increase.
In February, the monthly price rises slowed significantly. Overall consumer prices rose just 0.21%, with a minimum increase since August 2024. Prices rose 0.5% in January compared to December. Core prices also rose 0.2%, up half of the January 0.4% surge.
“The Trump administration has achieved a big victory in the war of inflation, with prices rising in February less than half of the January rise. By unleashing American energy and reducing wasteful spending, the Trump administration has already managed to reduce the sustained upward pressure on prices caused by the Bad Biden administration's policies.” Alfredo Ortiz, CEO of Job Creators Network.
Rising home prices and rents were major contributors to inflation in February. The shelter index rose 0.3% that month, accounting for almost half of the overall monthly increase, the Labor Bureau said.
Two of the most politically sensitive and economically prominent areas of the economy have seen consumers being significantly eased from inflation. The index of grocery prices, interpreted by the Labor Bureau as “food at home,” did not rise at all. Gasoline prices fell by 1%.
The more than expected inflation report shows that economists are likely overestimating the impact of tariff threats on prices. Many Wall Street economists hope that consumers will buy more items ahead of tariffs, and ironically raised prices to avoid future price increases. There is little evidence to support this in February price data.
Prices for new cars fell 0.1% in January and 0.3% for the year. Used cars and truck prices rose 2.2% in January, but rose another 0.9% in February.
Despite overall flat grocery prices, egg prices rose again in February, up 10.4%. I drove an i.6 refinese in a basket that also contained meat, chicken and fish.
Product prices have risen by 0.1% from 0.4% in January. Service prices rose 0.3%, 0.5% a month ago. Another measure to rule out food and energy prices, core commodity prices, rose 0.3%. The prices of core services excluding energy services increased by 0.5%.
The price of durable goods, a category expected to be affected by tariff expectations, fell by a surprising 0.1% in February. It increased by 0.4% in January.
The better-than-expected inflation data is likely to provide some relief to the Federal Reserve, suggesting prices are heading in the right direction. The Fed cut three cuts in the Biden administration's tail end, including an ultra-large 75 basis point cut a few weeks before the election, putting the labour market at risk of weakening and inflation heading towards its 2% target. However, in the next few months, the labor market was stronger than expected, and inflation was intensified.
