Inflation in February rose 2.8% on an annual foundation, barely decrease than economists had forecast however persevering with to sign that value hikes stay elevated regardless of the Federal Reserve’s efforts to tame inflation to a 2% annual fee. 

By the numbers

The Client Value Index was forecast to rise 2.9% final month, in accordance with economists polled by monetary information agency FactSet. The CPI, a basket of products and providers usually purchased by customers, 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 value will increase moderating after January’s sturdy launch,” stated Kay Haigh, world co-head of fastened earnings and liquidity options in Goldman Sachs Asset Administration.

Regardless of the lower-than-expected inflation, the Federal Reserve continues to be prone to maintain off on reducing charges at its March 19 assembly, Haigh famous. “[The] mixture of easing inflationary pressures and rising draw back dangers to progress counsel that the Fed is transferring nearer to persevering with its easing cycle,” Haigh stated.

Grocery costs are persevering with to rise, with groceries growing 2.6% in February from a yr earlier, the CPI report stated. The continuing rise of meals prices is making a monetary pinch for a lot of households, economists observe. 

Egg costs have 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 “progressively accelerating since mid-2024, reaching virtually 5% on a 3-month annualized foundation” in January, in accordance with Morgan Stanley economists in a March 6 analysis observe. 

Different objects that noticed value hikes in February embody automobile 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 vehicles, 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 important ache factors for client budgets — shelter, medical care and automobile insurance coverage — had substantial will increase.”

What it means on your cash

Despite the fact that the inflation information got here in lighter than anticipated, value will increase are nonetheless pacing properly 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. 

Meaning customers and companies will proceed to face increased borrowing prices for longer, whereas nonetheless grappling with elevated value 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 latest financial uncertainty will make them ever extra data-dependent within the coming weeks and months.”