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Economic News

United States: Price Growth Was Weaker in February ... But Is This the Calm Before the Storm?

March 12, 2025
Francis Généreux
Principal Economist

Highlights

  • The US consumer price index (CPI) increased 0.2% in February after a 0.5% jump in January. The index for all items less food and energy rose 0.2% in February after climbing 0.4% in January.
  • The year-over-year change in total CPI went from 3.0% in December to 2.8% in January. Core inflation slid from 3.3% to 3.1%.

Comments

Good news on consumer price trends has been scarce in recent months. February's print is therefore particularly welcome, especially since we suspect that the Trump administration's trade policy will eventually lead to a higher cost of living for US households.

 

The first round of tariffs, a 10% tariff hike on imports of goods from China, was implemented on February 4, but it's still too early to see its impact on consumer prices. Prices for goods excluding food and energy were up 0.2% month-on-month. That's slightly lower than the 0.3% recorded in January, but higher than the average -0.1% recorded for 2024 as a whole. That means that some pressure is already being felt, and this is where we’ll see the impacts of the tariffs that are being—or will be—imposed by the White House.

 

February's price growth for services excluding energy is the weakest since June 2024. Prices excluding shelter were especially soft, gaining just 0.2% after January’s 0.8% rise. The 4% decrease in airline fares was a major contributor. In terms of shelter, growth for rents and owners’ equivalent rent was stable, but lodging away from home slowed (+0.2% in February after a 1.7% increase in January).

 

All in all, price growth eased in February, but it looks like it may be the calm before the storm. Sooner or later, the stacked tariffs will push goods prices higher, but the pressure is contained for now. The tariff increases expected in April may cause more damage, but their impact on consumer prices will only be felt gradually in the months and quarters ahead. That said, consumer and business inflation expectations also bear watching.

Implications

The upward trend in consumer prices that prevailed until January seems to have subsided in February. That's good news—but the reprieve may be temporary, given the potential consequences of the United States trade policy. The Federal Reserve should be fairly comfortable with the current circumstances, and we don’t expect them to alter their monetary policy next week.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively.
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