Inflation in the United States fell last month for the first time since September, while consumer prices rose modestly as higher housing costs were partially offset by lower air travel costs.
These developments give the Federal Reserve room to keep interest rates unchanged next week, while closely monitoring the potential impact of the trade war on the economy, A2 reports.
The consumer price index rose 2.8% in February from a year earlier, but was lower than the 3% increase in January, according to a report released Wednesday by the Labor Department.
Core prices, which exclude volatile categories such as food and energy, rose 3.1% from a year earlier, compared with a 3.3% increase in January. The core figure is the lowest since April 2021.
The decline was bigger than economists had forecast, according to a survey by FactSet. However, inflation remains above the Federal Reserve's 2% target. Most economists expect inflation to remain high this year as U.S. tariffs take effect.
The report “is encouraging news, although it doesn’t tell us much about where inflation is headed,” said Oren Klachkin, an economist with Nationwide Financial Markets, in an email. “While tariffs may cause commodity prices to rise, we see the risk of inflation rising.”
According to the report, monthly inflation was lower than expected. Consumer prices rose 0.2% in February, a smaller increase than the 0.5% increase recorded in January. Core prices rose 0.2%, compared with 0.4% in January.
Economists watch core prices because they are usually a better indicator of inflation. A sharp 4% drop in the cost of air travel in February, compared with January, helped to reduce overall inflation.
Rental price growth also slowed, while the costs of hotel rooms and car insurance rose much more slowly in February than in January. The price of new cars fell last month compared with January.
Food prices have remained unchanged since January, bringing relief to consumers who are facing a 25% price increase from four years ago./ Voice of America (A2 Televizion)
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