WASHINGTON — Federal Reserve officials received concerning news Thursday as their preferred inflation metric showed continued price pressures in February, occurring before the Iran conflict sent gasoline costs soaring nationwide.
The closely watched inflation indicator climbed 0.4% from January to February, marking a slight uptick from the prior month’s increase. Year-over-year, consumer costs advanced 2.8%, matching January’s annual pace. The economic data release came later than usual due to a reporting backlog stemming from the six-week federal government shutdown that occurred last autumn.
When removing volatile food and fuel prices, the core inflation measure similarly jumped 0.4% month-to-month in February, while posting a 3% annual increase. This yearly figure represents a modest decline from January’s 3.1% reading.
However, the monthly gains suggest an annualized pace that would significantly exceed the Federal Reserve’s 2% inflation goal if sustained throughout the year.
Thursday’s figures serve as a preview for more crucial inflation statistics scheduled for Friday’s release, when officials will unveil March’s consumer price index data. Friday’s report will mark the first to capture the economic effects of surging fuel costs triggered by the Iran conflict. Economic analysts predict March will show a substantial 0.9% monthly jump and a 3.4% annual increase, representing a sharp rise from February’s 2.4% yearly rate.
The anticipated March inflation surge is expected to intensify Federal Reserve concerns about prices drifting further from their target, making near-term interest rate reductions increasingly unlikely. During their latest policy meeting, several Fed policymakers expressed support for considering potential rate increases if inflation trends fail to improve.
