US consumer inflation cools slightly as tariff worries flare
FILE – A shopper checks eggs before he purchases at a grocery store in Glenview, Ill., Tuesday, Jan. 10, 2023. (AP Photo/Nam Y. Huh, File)
Washington, United States — US consumer inflation inched lower in February according to government data Wednesday, in the first full month of Donald Trump’s White House return — but concerns remain over stubborn price growth as jitters flare over the president’s trade policies.
The consumer price index (CPI) came in at 2.8 percent last month from a year ago, down from 3.0 percent in January, said the Department of Labor.
While easing inflation would be a relief for policymakers, the latest reading is the lowest in just four months — signaling a longer road ahead to bringing price increases back to officials’ two percent target.
READ: US consumer inflation unexpectedly accelerated to 3.0% in January
The world’s biggest economy is also grappling with fears of a downturn — and near-term inflation — sparked by Trump’s expanding slate of tariffs.
On Wednesday, Trump’s latest salvo of 25 percent levies on steel and aluminum imports kicked in, sparking vows of firm responses from key US trading partners.
The European Commission said it would impose countermeasures from April 1 to counter Washington’s “unjustified trade restrictions.”
Between January and February, the CPI picked up 0.2 percent, Labor Department data showed, also a cooldown from January’s 0.5 percent figure.
Excluding the volatile food and energy categories, the index was up 3.1 percent from a year prior, an improvement from before as well.
Last month, a pick-up in shelter costs was partially offset by declines for airline fares and gasoline prices. The index for food also picked up for the month.
The index for eggs jumped 10.4 percent, the report said.
Egg prices — a hot political issue — have surged recently as the country contended with an avian flu outbreak.
“I expect to see more risks going forward, particularly with the tariffs and the uncertainty around them,” said economist Dan North of Allianz Trade North America.
“This level of uncertainty is, you might say, trailblazing,” he told AFP.
Even though inflation came in a touch below a consensus forecast by analysts, North pointed out that downward progress remains sluggish.
The cooler reading on Wednesday might not be enough to nudge the Federal Reserve towards further rate cuts, given that the US economy is still holding up.
“We still have spending even though it’s slowing down, we still have a strong labor market,” North noted. “From the aspect of stimulating the economy, there’s no need for a cut.”
Fed policymakers will be gathering next Tuesday and Wednesday to mull further adjustments to the benchmark lending rate, after chair Jerome Powell maintained last week that the bank need not rush toward changes.
