- The expected rise in the consumer price index for February is projected to be 0.3%, covering a wide range of products and services throughout the U.S. economy.
- Annually, this would result in aheadline inflation of 2.9% and core inflation of 3.2%, both decreasing yet remaining above the Federal Reserve’s 2% objective.
As worries surge that President Donald Trump’s tariff policies might intensify inflation, a report released on Wednesday may offer somewhat reassuring information.
The expected rise in the consumer price index for February is projected at 0.3%, covering a wide range of products and services within the biggest global economic market. This prediction applies equally to the overall figure as well as the core index, which leaves out fluctuating costs related to food and energy.
Annually, this would result in aheadline inflation of 2.9% and a core reading of 3.2%, which is 0.1 percentage pointslower compared to January figures.
The positive aspect is that these figures indicate a consistent yet gradual decrease in the inflation rate throughout the last year. However, the downside is they remain significantly higher than the Federal Reserve’s target of 2%, which probably means the central bank will stay on pause during their upcoming meeting next week.
Morgan Stanley economist Diego Anzoategui stated in a report, “We anticipate an overall slowdown, particularly with reduced pricing for core goods and services.” He continued, explaining why some sectors remain high: “(1) Used car prices will likely increase due to previous wildfires; (2) Our research indicates specific products and services exhibit lingering seasonal effects during February; and (3) We believe ongoing supply limitations continue to drive up airline ticket costs throughout this month.”
The major query at this point is which direction things will take next.
Trump’s tariff moves
have raised concerns in the markets for both
increasing prices alongside weaker economic expansion
Historically, Federal Reserve officials have been more focused on the inflation aspect of their dual mandate concerning price stability and maximum employment. As such, an extended phase of elevated prices might keep the Fed inactive for a more significant duration.
However, Federal Reserve Chair
Jerome Powell
His peers and he have suggested that, in their opinion, tariffs have traditionally been isolated price hikes rather than primary causes of inflation. Should this hold true again, policymakers may disregard temporary price fluctuations stemming from trade policies and proceed with reducing interest rates, aligning with market expectations for this year.
Goldman Sachs analysts anticipate that the Federal Reserve will remain inactive for now as they await more clarity on monetary policy. They predict that subsequently, possibly later this year, the central bank might reduce its key interest rate by 0.5%.
The company noted in a statement, “We anticipate continued disinflation due to adjustments in the automotive, housing rental, and labor markets. However, we foresee counterbalancing effects from catch-up inflation in healthcare as well as a positive impact from increased tariffs.”
The Bureau of Labor Statistics is set to publish the CPI report at 8:30 a.m. Eastern Time.
