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U.S. inflation slowed in February for the first time since September, according to a report by the Labor Department. The consumer price index (CPI), which measures the cost of everyday goods like gasoline, groceries, and rent, increased by 0.2% from the previous month and 2.8% from a year ago. This is lower than the previous month's 3% annual increase. Core prices, which exclude food and energy, rose 3.1% from a year earlier, marking the lowest level since April 2021.
The cooling inflation was more significant than economists had expected, as reported by Fox Business. However, inflation remains above the Federal Reserve's 2% target, and economists predict that inflation will stay elevated due to new tariffs imposed by President Donald Trump. These tariffs, including a 25% duty on steel and aluminum imports, could lead to higher prices and potentially slow the economy.
Despite the slower inflation, food prices remained a concern. Egg prices rose 10.4% in February, driven by avian flu outbreaks, while grocery prices remained unchanged from January. Energy prices increased by 0.2%, but gasoline prices fell by 1%.
Federal Reserve Chair Jerome Powell indicated that the Fed is likely to keep interest rates unchanged at its upcoming meeting. The Fed is adopting a cautious approach, awaiting more data on how trade and immigration policies will impact the economy.
As the U.S. faces potential trade conflicts, the European Union has announced retaliatory tariffs on U.S. products in response to the new American tariffs. The economic landscape remains uncertain, with analysts warning of a possible recession if trade tensions continue.