Consumer price growth was steady in February, right before the Iran war rattled global energy markets and sent prices skyrocketing.
The consumer price index rose 0.3% month over month or 2.4% from one year ago, which was in line with what analysts and economists were expecting.
Core inflation, which excludes volatile food and energy prices, was also reported right in line with expectations, rising 0.2% from January or 2.5% from one year ago.
Grocery prices roes 0.4% from January to February, and are now tracking a 2.4% increase from a year ago, while "food away from home," a category that measures dining out, rose 0.3% from January and has now risen 3.9% from one year ago.
February’s report was produced before the United States and Israel launched a large-scale attack on Iran on the final day of the month.
The critical Strait of Hormuz off Iran’s western coast has been effectively shut down since the war began.
More than 20% of the globe’s supply of oil typically transits through the waterway to reach the international markets. As a result, the price of U.S. crude oil has increased more than 20% since the first strikes. Retail gas prices have also soared more than 50 cents.
“Today’s CPI report is already something of a historical artefact,” wrote Principal Asset Management’s Seema Shah in a note. “With oil prices up roughly $30 in recent weeks — and potentially heading toward triple digits — investors are far more focused on how the conflict feeds into inflation over the months ahead.”
Also in February, the Supreme Court struck down many of President Donald Trump’s tariffs, ruling that he exceeded his presidential authority when he imposed country-specific emergency tariffs last year. While Trump has since replaced some of these tariffs with a global 10% duty, the impact on prices is not yet clear.
With the latest report, consumer inflation still sits north of the Federal Reserve’s 2% target annual rate, but it has come down in recent months from its high of 3% in September.
A number of consumer products saw sharp price jumps last month.
Clothes and shoes rose 1.3% just on a month-over-month basis, in what could be a hint of tariffs passing through to consumers.
Gas services provided by a utility also jumped 3.1% in the month, as did fruits and vegetables, whose prices rose 1.4% in February. A number of meat products also saw jumps in the month.
The category that includes appliances and household furnishings is also up 3.9% year-over-year, in yet another sign of how tariffs have impacted sectors that rely heavily on imports.
