February Inflation - Meeting Expectations

February inflation met expectations for the month, remaining at the lowest levels since May 2025. Core inflation, which excludes the volatile food and energy prices also met analyst expectations and near its lowest level since 2021. In January prices rose 2.4% compared to a year ago, matching expectations and unchanged from the month prior. Month-over-month, prices rose at a rate of 0.3%, slightly higher than the 0.2% reading in January but in line with expectations.  Core inflation remained unchanged at 2.5% year-over-year. On a monthly basis, core CPI increased by 0.2%, slightly better than the 0.3% increase in January.  The notable increase in energy prices associated with the ongoing war in Iran would not have been captured in this month’s reading; however, March figures may be upwardly biased as a consequence of the elevated energy prices. If inflation remains manageable, we would expect policymakers to favor accommodation in support of the labor market in the year ahead.

• Consumer prices (CPI) increased 2.4% year-over-year. In February, the consumer price index (CPI) increased 2.4%, matching expectations and in line with January.  The cost of medical care services (+4.1%) shelter (+3%), and food (+3.1%)  were key contributors to the overall increase, offsetting declines in gasoline (-5.6%) and used vehicles (-3.2%).  Core CPI (excludes food and energy) increased 2.5% year-over-year, unchanged from the month prior and meeting expectations.
• Consumer prices (CPI) rose 0.3% month-over-month.  In February, consumer prices rose 0.3% month-over-month matching expectations but 0.1% higher than the prior month’s reading.  Core CPI (excludes food and energy) increased 0.2% month-over-month, meeting expectations.