Inflation cools in February after string of hot reports
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Inflation eased in February: The Consumer Price Index rose 0.2% last month, while the gauge that excludes food and energy prices increased by a similar amount, the Labor Department said on Wednesday.
Why it matters: Inflation cooled as tariffs began to take effect, though economists warn about higher consumer prices and an economic slowdown as the trade war intensifies.
By the numbers: The overall index increased at a slower pace. That was a welcome pullback, after three straight months of faster gains that sparked fears progress on cooling inflation had stalled.
- In the 12 months through February, CPI rose 2.8%, down from 3% the prior month.
- Core CPI — the measure that strips out food and energy costs, considered to be a better gauge of underlying inflation — rose 3.1%, compared to the 3.3% in January.
The big picture: President Trump imposed 10% tariffs on all Chinese goods imported to the U.S. last month — on top of existing tariffs that lingered from his first term.
- The administration has since doubled those tariffs, effective earlier this month — as well as 25% tariffs on steel and aluminum imports this week.
- Trade partners, including China and Canada, have retaliated with tariffs on U.S. exports as well as non-tariff measures — like boycotts in Canada of U.S. liquor from Republican states.
What to watch: Fallout from the trade war has made the Federal Reserve's inflation battle more complicated.
- Fed officials are in "wait-and-see" mode to assess how the tariffs will impact prices, as well as broader economic growth.
- A growth scare has taken hold in recent weeks, with some economists raising the possibility of stagflation — a troubling combination of sticky inflation and sluggish growth.
Editor's note: This story has been updated with additional data on the February report.
