Inflation price rose by 2.8% in February, CPI report exhibits. Here is what which means for worth reduction.

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

By the numbers

The Shopper Worth Index was forecast to rise 2.9% final month, in keeping with economists polled by monetary knowledge agency FactSet. The CPI, a basket of products and companies usually purchased by shoppers, tracks the change in these costs over time. 

February’s knowledge comes after inflation accelerated in January, when it rose 3% on an annual foundation. 

What economists say

The report exhibits “additional indicators of progress on underlying inflation, with the tempo of worth will increase moderating after January’s sturdy launch,” mentioned Kay Haigh, international co-head of mounted earnings and liquidity options in Goldman Sachs Asset Administration.

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

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

Egg costs had been a driver of final month’s grocery inflation, with the price of eggs leaping 58.8% from a yr earlier, the report mentioned. Espresso rose 6% on an annual foundation, whereas restaurant meals jumped 3.7% from a yr in the past.

Meals inflation has been “step by step accelerating since mid-2024, reaching virtually 5% on a 3-month annualized foundation” in January, in keeping with Morgan Stanley economists in a March 6 analysis observe. 

Different objects that noticed worth 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 cars, including to an unsure outlook for inflation, economists say. 

“Excellent news on inflation, however excellent news pre-tariffs,” mentioned Robert Frick, company economist with Navy Federal Credit score Union. “Sadly, three essential ache factors for client budgets — shelter, medical care and automobile insurance coverage — had substantial will increase.”

What it means in your cash

Although the inflation knowledge got here in lighter than anticipated, worth will increase are nonetheless pacing properly above the Fed’s 2% annual aim. Due to that, economists say it is unlikely the Fed will reduce charges at its assembly subsequent week. 

Which means shoppers and companies will proceed to face larger borrowing prices for longer, whereas nonetheless grappling with elevated worth hikes, economists say.

“The Federal Reserve will stay firmly planted on the sidelines at subsequent week’s assembly,” Bankrate Chief Monetary Analyst Greg McBride mentioned 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.”