US inflation stayed flat at 2.4% in February before effects of war on Iran kicked in | Inflation
U.S. inflation remained steady at 2.4% in February, according to government data released Wednesday showing the state of the U.S. economy before it was thrown into a tailspin by the U.S.-Israeli conflict with Iran.
This leveling off comes after prices fluctuated last year, reaching a four-year low in April and then rising again in September. In late autumn, inflation began to decline again, reaching 2.4% in January.
Core inflation, which does not include the volatile energy and food sectors, was 2.5%. The biggest price increases were seen in housing, medical care and utilities.
Some industries that rely heavily on imports have shown clear signs of impact from Trump’s tariffs. Coffee prices increased by 18.4 percent compared to last year. Prices of canned fruits and vegetables rose by 6.2%, with steel and aluminum taxed at 50%, while prices of furniture and bedding increased by 4.2%.
Gas prices actually fell 5.2% for the year; This is in stark contrast to the skyrocketing prices seen since the beginning of the US-Israeli war against Iran.
Even before the Iran conflict began, Americans were worried about rising prices, but little relief seemed on the horizon. Polls show Americans, especially independents, souring It’s about the President who once promised to lower prices but shook up global trade with aggressive tariff policies.
The US supreme court struck down most of Trump’s tariff regime last month. It immediately imposed a new 15% tariff on all imports under a different law surrounding the decision.
The US conflict in Iran has created greater uncertainty about prices, triggering oil price shocks around the world. Gas prices at the pump in the US were just under $3 at the end of February and rose to $3.50 on March 10. If continued for a long time, high gas prices will lead to an increase in the prices of other goods. Economists estimate that every $10 increase in the price of a barrel of oil could lead to a 0.2% increase in overall price levels.
On Sunday, Trump said on social media that oil price shocks from the Iran conflict were “a very small price to pay.”
“ONLY FOOLS THINK DIFFERENTLY,” he wrote.
This new inflation data will play a key role at next week’s U.S. Federal Reserve board meeting, where officials will decide on any changes to interest rates. Despite the ongoing conflict with Iran, there is consensus that the central bank will keep interest rates steady for the second time this year.
Price increases have remained stubbornly above the US Federal Reserve’s 2% target rate. With this insistence, most Fed officials have steadfastly resisted calls to lower interest rates at the risk of further inflation. But Donald Trump insisted that interest rates must fall, ignoring concerns that lower interest rates would lead to higher prices and statements by Fed officials that tariffs were worsening inflation.
The Fed often talks about its “dual mandate”: to keep inflation and unemployment low by manipulating interest rates. Higher interest rates slow the economy but cool prices, while lower interest rates can risk higher inflation.
Tightening in the labor market has put pressure on the other side of the Fed’s dual mandate. February employment data showed the US economy lost 92,000 jobs and the unemployment rate rose to 4.4%.
