On a Wednesday in Washington, the government's measure of everyday prices showed a modest February rise of 0.3%, exactly as economists had anticipated, yet beneath that steadiness stirred a sharper story. Gasoline, which had been falling for two months, turned upward as a war between the United States, Israel and Iran reshaped the price of fuel, and the true weight of that shift has not yet entered the count. Much of the pain still lies ahead, in readings that will capture the full reach of the conflict, along with the lingering echo of tariffs that businesses have so far absorbed. Officials a
US Consumer Prices Rise 0.3% in February as Middle East War Lifts Gasoline; March Inflation Seen Climbing Further
Gasoline turned upward just as the war began, and March has yet to be counted.
Mark
The headline is just 0.3%, in line with forecasts. Why does this report feel like it matters more than that?
Mimi
Because the gasoline jump mostly happened after the period measured. The war started at the end of February, and pump prices are up more than 18% since, to $3.54. February only caught the early edge of it.
Mark
So March is the number to watch.
Mimi
That's what economists expect, a further rise in inflation in March.
Luke
Worth being precise there: that's a forecast, not a measurement. And the 18% figure comes from AAA, not from the government's CPI data.
Mark
What about the steady 2.4% annual rate? Is that good news?
Mimi
Partly it's arithmetic. Last year's high readings dropped out of the calculation, so the yearly number held steady without prices necessarily calming.
Luke
Same for core at 2.5%. The report attributes that to favorable base effects, so I wouldn't read it as a trend.
Mark
And tariffs?
Mimi
Businesses have absorbed much of the cost, but economists say that's unlikely to last. Trump put a 10% global tariff in place after the Supreme Court ruling and said it would rise to 15%.
Luke
Unknown is how fast any of it reaches shelf prices. The pass-through has been staggered, and the economists' view that firms will stop absorbing costs is a judgment, not a result.
Mark
What does the Fed do?
Mimi
It's expected to hold rates next week, and it watches PCE rather than CPI. January's PCE is due Friday, February's on April 9.
Il Polso
- Gasoline surged more than 18% to $3.54 a gallon within weeks of the U.S.-Israeli war on Iran beginning, reversing two months of falling pump prices.
- Oil shot well above $100 a barrel, swinging sharply as markets reacted to every hint of how long the war might last.
- Core inflation held to a mild 0.2%, but economists warn that this calm will not survive the next set of figures.
- Businesses have quietly absorbed tariff costs so far, yet analysts expect those expenses to start reaching shoppers.
- Forecasters expect March inflation to climb further, and the Federal Reserve is poised to hold rates steady next week while watching the PCE gauge.
On a Wednesday in Washington, the government's measure of everyday prices showed a modest February rise of 0.3%, exactly as economists had anticipated, yet beneath that steadiness stirred a sharper story. Gasoline, which had been falling for two months, turned upward as a war between the United States, Israel and Iran reshaped the price of fuel, and the true weight of that shift has not yet entered the count. Much of the pain still lies ahead, in readings that will capture the full reach of the conflict, along with the lingering echo of tariffs that businesses have so far absorbed. Officials at the Federal Reserve, who watch a different yardstick, will meet next week with the sense that the calm of February may be the last quiet page before the rest is written.
On Wednesday morning in Washington, the Labor Department reported that consumer prices rose 0.3% in February, just as economists polled by Reuters had expected. The surprise lay in gasoline. After two months of falling pump prices, fuel began climbing as the market braced for a widening war in the Middle East, a U.S.-Israeli campaign against Iran that began at the end of February.
The real jolt came after the survey period closed. According to the motorist group AAA, the average gallon has jumped more than 18% to $3.54. Oil has been even more restless, surging well above $100 a barrel before easing on Tuesday, when President Trump said the war could end soon. Economists expect March inflation to rise further as those higher costs flow through.
The year-over-year rate held at 2.4%, but that steadiness owes more to last year's high readings dropping out of the calculation than to any real cooling. Core prices, which strip out food and energy, rose a milder 0.2%, helped by falling used car prices and smaller rent increases.
Tariffs remain a slow-moving pressure. Trump's sweeping import duties, since struck down by the Supreme Court, are still working their way into shelf prices, and businesses are unlikely to keep absorbing them. The Federal Reserve, watching a different gauge, is expected to hold rates next week, though economists warn that core PCE may run hotter than core CPI suggested.
On Wednesday morning in Washington, the Labor Department's Bureau of Labor Statistics reported that the Consumer Price Index rose 0.3% in February, up from a 0.2% gain in January. Economists polled by Reuters had forecast exactly that. The notable detail was gasoline: prices at the pump had fallen in the CPI report for two straight months, and they turned upward as the cost of fuel climbed in anticipation of an escalating war in the Middle East.
That war, a U.S.-Israeli campaign against Iran, began at the end of February. Since then, according to the motorist group AAA, the average price of gasoline has jumped more than 18% to $3.54 per gallon. Most of that increase falls after the February survey period, which is why economists expect a further rise in inflation when March figures arrive.
Oil has been more volatile than the pump price. It shot well above $100 per barrel before pulling back on Tuesday, after President Donald Trump said the war could end soon.
Over the 12 months through February, the CPI advanced 2.4%, matching January's pace. The steadiness partly reflects last year's high readings dropping out of the calculation rather than any fresh cooling in prices.
Strip out food and energy, and the picture was milder. Core CPI gained 0.2% in February after 0.3% in January. A decline in used motor vehicle prices held it down, as did smaller increases in rents. On a yearly basis, core inflation was 2.5%, the same as in January, again helped by favorable base effects.
Tariffs are the other pressure on prices. The CPI continued to reflect a staggered pass-through from Trump's sweeping import duties, which he imposed under a law meant for national emergencies and which the U.S. Supreme Court has since struck down. Businesses have absorbed much of those costs so far, but economists said they are unlikely to keep doing so, pointing among other things to persistently higher input-cost readings in the Institute for Supply Management surveys. After the court ruling, Trump imposed a 10% global tariff, which he said would rise to 15%.
The Federal Reserve is watching a different gauge. It tracks the Personal Consumption Expenditures price indexes for its 2% inflation target, and it is expected to leave interest rates unchanged at its meeting next week. Economists cautioned that the tame core CPI reading is unlikely to carry over into February's core PCE figure, because the two indexes weight components differently and because services prices showed unexpected strength in the January Producer Price Index report.
The next data points are close. January's delayed PCE price index is due Friday and is expected to show a solid increase in core inflation. February's PCE data will follow on April 9.
Citazioni salienti
Economists said businesses are unlikely to keep absorbing tariff costs, citing persistently higher input-cost readings in ISM surveys.— Economists cited by Reuters
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