March 19, 2025
WASHINGTON (AP) — U.S. inflation slowed last month for the first time since September, and a measure of underlying inflation fell to a four-year low.
The consumer price index increased 2.8% in February from a year ago, Wednesday’s report from the Labor Department showed, down from 3% the previous month. Core prices, which exclude the volatile food and energy categories, rose 3.1% from a year earlier, down from 3.3% in January. The core figure is the lowest since April 2021.
The declines were larger than economists expected, according to a survey by data provider FactSet. Yet they remain higher than the Federal Reserve's 2% target.
“Today's cooler-than-expected reading was a breath of fresh air,” Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said. Yet she cautioned that the Fed is likely to keep its key rate unchanged for now until it sees further evidence of how White House policies affect the economy.
On a monthly basis, inflation also came in much lower than expected. Consumer prices rose 0.2% in February from the previous month, down from a big 0.5% jump in January. Core prices rose just 0.2%, below the 0.4% increase in January. Economists watch core prices because they are typically a better guide to inflation's future path.
A sharp drop in air fares, which fell 4% just in February from the previous month, helped bring down overall inflation. Rental price increases also slowed. And the price of new cars fell last month compared with January.
Grocery prices were unchanged last month from January, bringing some relief to consumers grappling with a 25% jump in grocery prices from four years ago. The cost of eggs, however, jumped 10.4% in February from the previous month and are nearly 60% more expensive than a year ago.
Avian flu has forced farmers to slaughter more than 160 million birds, including 30 million in January. Average egg prices hit $5.90 a dozen nationwide in February, a record high. The price had consistently been below $2 a dozen for decades before the disease struck.
Wednesday's update is likely to encourage the inflation-fighters at the Federal Reserve. Fed Chair Jerome Powell said in January that rate cuts were on hold and another reduction is highly unlikely at the Fed's meeting next week.
