Inflation rose 2.8% on an annual basis, slightly lower than economists had forecast but continuing to signal that price hikes remain elevated despite the Federal Reserve’s efforts to tame inflation to a 2% annual rate.
By the numbers
The Consumer Price Index was forecast to rise 2.9% last month, according to economists polled by financial data firm FactSet. The CPI, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.
February’s data comes after inflation accelerated in January, when it rose 3% on an annual basis.
What economists say
The report shows “further signs of progress on underlying inflation, with the pace of price increases moderating after January’s strong release,” said Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management.
Despite the lower-than-expected inflation, the Federal Reserve is still likely to hold off on cutting rates at its March 19 meeting, Haigh noted. “[The] combination of easing inflationary pressures and rising downside risks to growth suggest that the Fed is moving closer to continuing its easing cycle,” Haigh said.
Grocery prices are continuing to rise, with groceries increasing 2.6% in February from a year earlier, the CPI report said. The ongoing rise of food costs is creating a financial pinch for many households, economists note.
Egg prices were a driver of last month’s grocery inflation, with the cost of eggs jumping 58.8% from a year earlier, the report said. Coffee rose 6% on an annual basis, while restaurant meals jumped 3.7% from a year ago.
Food inflation has been “gradually accelerating since mid-2024, reaching almost 5% on a 3-month annualized basis” in January, according to Morgan Stanley economists in a March 6 research note.
Egg prices are to blame, but also beverages, fruits and vegetables are pricier as well, they noted.
President Trump’s tariff barrage has the potential to boost prices for many products, from food imports to automobiles, adding to an uncertain outlook for inflation, economists say.
“There has been little in the way of progress on inflation — as measured by the Consumer Price Index — since the middle of last year and now there are worries that tariffs could add another layer of price increases,” said Bankrate chief financial analyst Greg McBride in an email. “The CPI will remain a closely watched economic release for months to come.”
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
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