Inflation in the United States slowed last month for the first time since September, and a measure of core inflation fell to its lowest level in four years, despite additional tariffs on steel and aluminum that took effect Wednesday threatening to raise prices.
- Persistent inflation could spell trouble for President Donald Trump, who pledged during last year’s campaign to “decisively end inflation.”
- Avian flu has forced farmers to cull over 160 million birds, including 30 million in January alone.
- Wednesday’s update will likely encourage inflation fighters at the Federal Reserve.
The Consumer Price Index rose 2.8% in February compared to the previous year, according to Wednesday’s report from the Department of Labor, down from 3% the prior month. Core prices, which exclude volatile food and energy categories, increased 3.1% year-over-year, compared to 3.3% in January. This core figure is the lowest since April 2021.
The declines were larger than economists expected, according to a survey by data provider FactSet. However, they remain higher than the 2% target set by the Federal Reserve.
Persistent inflation could spell trouble for President Donald Trump, who pledged during last year’s campaign to “decisively end inflation.”
On a monthly basis, however, inflation was also much lower than expected. Consumer prices rose 0.2% in February from the previous month, down from a sharp 0.5% increase in January. Core prices rose just 0.2%, below January’s 0.4% gain. Economists watch core prices because they are typically a better indicator of future inflation trends.
Grocery prices remained unchanged last month compared to January, offering some relief to consumers facing a 25% increase in grocery prices over the past four years. However, egg prices surged 10.4% in February from the prior month and are nearly 60% more expensive than a year ago.
Avian flu has forced farmers to cull over 160 million birds, including 30 million in January alone.
The average price of eggs reached 9.79 euros ($4.95) per dozen nationwide in February, a record high. The price had consistently remained below 3.92 euros ($2) per dozen for decades before the disease spread.
With Trump imposing—or threatening to impose—a broad range of tariffs on imports from Canada, Mexico, China, Europe, and India, most economists forecast that price growth will likely remain elevated this year.
Tariffs have rattled financial markets and could drastically slow the economy, with some analysts raising the odds of a recession. Many economists expect inflation would have declined this year without the import taxes, but with the tariffs in place, they predict inflation will stay elevated through the end of the year.
Trump has pledged to impose reciprocal tariffs on any country maintaining duties on U.S. exports by April 2. Economists at the Yale Budget Lab estimate those tariffs alone could raise the average U.S. tariff rate to its highest level since 1937 and cost households an average of 3,238 euros ($3,400).
Wednesday’s update will likely encourage inflation fighters at the Federal Reserve.
Fed Chair Jerome Powell said in January that interest rate cuts were on pause and another cut is very unlikely at next week’s Fed meeting.
The biggest unknown for the Fed—and the economy overall—are tariffs and Trump’s threats to impose more. Since taking office in January, Trump has imposed a 20% tax on all imports from China and a 25% tax on imports from Canada and Mexico, though most of those tariffs have been suspended for a month.
On Wednesday, the administration raised tariffs on all steel and aluminum imports to 25%, promising the taxes would help create manufacturing jobs in the U.S. at a time when Trump’s shifting tariff threats are roiling the stock market and fueling fears of an economic slowdown.
The European Union immediately responded by announcing retaliatory trade actions with new tariffs on industrial and agricultural products from the United States.
Trump has pledged reciprocal tariffs on countries that tax U.S. exports, including Europe, India, and South Korea, by April 2.
Image: Infobae
