By Christopher Lugerber, Economics writer for the Associated Press
WASHINGTON (AP) — U.S. inflation slowed for the first time since last September, and the underlying inflation measure has dropped to its lowest low in four years, even as additional steel and aluminum fees kicked Wednesday could raise prices.
The consumer price index rose 2.8% in February a year ago, with a Wednesday report from the Labor Bureau down from 3% the previous month. Core prices excluding volatile food and energy categories rose 3.1% from 3.3% in January from a year ago. The core figure is the lowest since April 2021.
The decline was greater than expected economists, according to a study by data provider Factset. But they remain above the Federal Reserve 2% target. Sticky inflation could cause problems for President Donald Trump, who promised last year’s campaign to “knock out hell from inflation.”
However, each month, inflation was much lower than expected. Consumer prices rose 0.2% from the previous month in February, down from the big jump of 0.5% in January. Core prices rose just 0.2%, below the January 0.4% increase. Economists are usually looking at core prices as they are a better guide to the future path of inflation.
Grocery prices remained the same since last month in January, bringing some relief to consumers working on a 25% jump to grocery prices four years ago. However, egg costs increased by 10.4% from the previous month in February, nearly 60% higher than a year ago.
The bird flu was forced to massacre more than 160 million birds in January, including 30 million people. The average egg price was a record high of $4.95 nationwide in February. Prices were consistently under $2 for decades before the disease began.
And most economists are likely to predict price growth as Trump imposes or threatens to impose broad tariffs on imports from Canada, Mexico, China, Europe and India.
Jobs can shake financial markets and slow the economy down sharply, with some analysts increasing the chances of a recession. Many economists expect inflation to fall this year without import taxes, but they predict that inflation will continue to rise until the end of this year when tariffs are imposed.
Trump pledged on April 2 to impose mutual tariffs on any country relating to US exports. The Yale Budget Lab economists calculate that these jobs themselves can raise the average US tariff rate since 1937 to the highest level, with the average household costing at $3,400.
Wednesday’s update could encourage inflationary fighters in the Federal Reserve. Fed Chairman Jerome Powell said in January that interest rate cuts were pending and another cut was very low at the Fed meeting next week.
The Fed’s biggest wildcard, and the economy as a whole, is the threat of tariffs and Trump’s threats putting more. Since taking office in January, Trump has levied a 20% tax on all imports from China and a 25% tax on imports from Canada and Mexico, but most of these tariffs have been suspended for a month.
On Wednesday, the administration raised tariffs on all steel and aluminum imports to 25%, pledging that taxes will help create jobs for U.S. factories at a time when taxes are shaking stock markets and causing fears of economic slowdowns.
The European Union responded with the kind of attitude that almost immediately announced retaliatory trade measures with new US industrial and agricultural obligations.
On April 2, Trump promised the country’s mutual obligation to export tariffs from the US, including Europe, India and South Korea.
Washington AP writers Josh Balk and Paul Wiseman, as well as European Lone Cook and David McHugh, contributed to the report.
Original issue: March 12, 2025 8:26am EDT
