Inflation held firm last month — but the war with Iran could change that
By Elisabeth Buchwald, CNN
(CNN) — Annual inflation was unchanged last month at 2.4%, according to the latest Consumer Price Index, released Wednesday.
On a monthly basis, prices rose 0.3% in February, a faster pace than January’s 0.2%, according to the Bureau of Labor Statistics.
The February inflation data was gathered before the United States and Israel launched an attack on Iran. The two-week conflict has already pushed up energy costs and raised prices at the pump for Americans. Those increases could begin to show up even more in inflation data in the coming months.
“These inflation numbers provide some comfort, but this month’s spike in energy prices make them a relic of the past,” David Russell, global head of market strategy at TradeStation, said in a note Wednesday. “Investors and the Federal Reserve are in uncharted territory right now, taking their cues from crude oil and tanker traffic in the Strait of Hormuz.”
The waterway, located between the Persian Gulf and the Gulf of Oman, is the only way to ship crude from the oil-rich Persian Gulf to the rest of the world. Iran controls its northern side. Oil tankers have been unable to safely travel through it.
Already, last month, energy prices were up 0.6%. Within that category, the biggest monthly jump was fuel oil prices, which were up 11.1%. Fuel for heating rose 3.1% and gasoline prices were up 0.8%. Meanwhile, electricity prices fell by 0.7% last month.
The monthly headline inflation data is in line with economists’ forecasts for a 0.3% monthly increase and lower than the annual rate of 2.5% they predicted.
Stripping out food and energy prices, which tend to be more volatile than other categories tracked, core inflation was unchanged from January on an annual basis at 2.5%. On a monthly basis it rose 0.2%, a slower pace than January’s 0.3%.
Tariffs showing up at the checkout
The impact of President Donald Trump’s tariff continued to show up in the prices consumers pay for highly imported goods. Among those, apparel prices rose 1.3% last month and household furnishings increased by 0.3%.
While the Supreme Court invalidated Trump’s most sweeping tariffs toward the end of last month, businesses have yet to receive any refunds for overpayments.
Though the administration recently promised to have a new system up and running to process refunds next month, businesses are unlikely to lower prices once they ultimately receive money back from the government. But it’s unclear exactly how long that could take.
Additionally, Trump enacted a broad 10% tariff after the Supreme Court ruling, using a different trade law. Various other sectoral tariffs, including a 25% tax on imported furniture, remain in place.
The-CNN-Wire
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