Catenaa, Wednesday, March 12, 2025- US inflation rose by slightly less than expected in February, official data showed on Wednesday, providing a momentary relief for investors and consumers as tariffs threatened to increase prices in the coming months.
According to the US Labor Department, the consumer price index, increased by 2.8% year on year in February, cooling off from the 3% seen in January.
The figures could bolster the case for the Federal Reserve to cut interest rates next week, though the majority of traders are still betting on rates remaining steady.
The stock market has been overall down since Inauguration Day amid escalating trade tensions and inflationary concerns, with the S&P 500 and Nasdaq Composite losing 7% and 10% of value since Trump was sworn in, respectively.
Those indexes ticked up 1% and 2% Wednesday morning, respectively, following the report.
Prices excluding food and energy categories—core inflation rose by 3.1%. That was the lowest year-over-year reading since 2021.
The cooler-than-expected core reading was due, in part, to a seasonally adjusted 4% drop in airline fares from a month earlier.
Shelter prices, which have been a significant source of inflationary pressure in recent years, continued to ease. They were up 4.2% from a year earlier—the smallest gain since December 2021. The Labor Department’s measure of shelter costs lags behind price trends in newly signed leases.
