Washington (AFP) – US consumer inflation inched lower in February according to government data Wednesday, in the first full month of Donald Trump’s White House return — but concerns remain over stubborn price growth as jitters flare over the president’s trade policies. The consumer price index (CPI) came in at 2.8 percent last month from a year ago, down from 3.0 percent in January, said the Department of Labor. This was slightly better than a consensus forecast of analysts predicted.
White House Press Secretary Karoline Leavitt said the report showed “the economy is moving in the right direction under President Trump,” pointing to his plans for “massive deregulation and energy dominance” to push down costs. While easing inflation is a relief for policymakers, the latest reading is just the lowest since late-2024, signaling a longer road ahead to bringing price increases back to officials’ two percent target. The world’s biggest economy is also grappling with fears of a downturn — and near-term inflation — sparked by Trump’s expanding slate of tariffs.
On Wednesday, Trump’s latest salvo of 25 percent levies on steel and aluminum imports kicked in, sparking vows of firm responses from the European Union and China. The European Commission said it would impose countermeasures from April 1 to counter Washington’s “unjustified trade restrictions.” Between January and February, the CPI picked up 0.2 percent, Labor Department data showed, also a cooldown from January’s 0.5 percent figure. Excluding the volatile food and energy categories, the index was up 3.1 percent from a year prior, an improvement from before as well.
Last month, a pick-up in shelter costs was partially offset by declines for airline fares and gasoline prices. The index for food also picked up for the month. The index for eggs jumped 10.4 percent, the report said. Egg prices — a hot political issue — have surged recently as the country contended with an avian flu outbreak.
**Tariff impact coming?** Trump has imposed sweeping tariffs on imports from Canada, Mexico and China since taking office, providing only a partial rollback for the United States’ immediate neighbors. But the added 10 percent tariffs on China “don’t appear to have had a discernible impact” last month including for apparel, furniture and electronic prices, said Ryan Sweet, chief US economist at Oxford Economics. The US president has since doubled the additional rate targeting the world’s second biggest economy to 20 percent.
“Odds are that these tariffs and others that the Trump administration recently implemented will begin to lift US consumer prices over the next few months,” Sweet said. Samuel Tombs, chief US economist at Pantheon Macroeconomics added that recent manufacturing surveys pointed to “an imminent upturn in CPI core goods inflation.”
**Fed on sideline** Sweet said the smaller-than-anticipated inflation hike is unlikely to change the Federal Reserve’s calculus. The central bank “will remain on the sideline until there is more clarity on tariffs, fiscal policy, and how the Trump administration’s immigration policies affect inflation and the economy,” he said.
“I expect to see more risks going forward, particularly with the tariffs and the uncertainty around them,” said economist Dan North of Allianz Trade North America. “This level of uncertainty is, you might say, trailblazing,” he told AFP. Even though inflation came in a touch below a consensus forecast by analysts, North pointed out that downward progress remains sluggish.
“We still have spending even though it’s slowing down, we still have a strong labor market,” North noted. “From the aspect of stimulating the economy, there’s no need for a cut.” Fed policymakers will be gathering next Tuesday and Wednesday to mull further adjustments to the benchmark lending rate, after chair Jerome Powell maintained last week that the bank need not rush toward changes.
© 2024 AFP
