WASHINGTON — Federal Reserve officials received concerning news Thursday as their preferred inflation measurement showed continued price pressures in February, occurring before the Iran conflict drove up gasoline costs nationwide.
The closely-watched inflation indicator climbed 0.4% between January and February, representing a modest uptick from the prior month’s reading. When measured against February of last year, consumer prices increased 2.8%, matching January’s annual rate. Thursday’s economic data release experienced delays due to a reporting backlog stemming from the six-week federal government shutdown that occurred last fall.
When removing volatile food and energy prices from calculations, the core inflation measure similarly jumped 0.4% month-over-month in February, while posting a 3% annual increase. The yearly figure represents a slight improvement from January’s 3.1% reading.
However, the monthly rate of increase, if sustained throughout an entire year, would significantly exceed the Federal Reserve’s established 2% inflation goal.
Thursday’s economic report serves as a preview for more crucial inflation statistics scheduled for Friday’s release, when federal officials will publish the widely-followed consumer price index covering March activity. Friday’s numbers will mark the first official data capturing the gasoline price surge resulting from the Iran conflict. Economic analysts predict the March report will demonstrate a substantial 0.9% monthly jump from February, alongside a 3.4% yearly increase. The annual measurement would represent a dramatic rise from February’s 2.4% figure.
The anticipated sharp inflation acceleration in March will intensify Federal Reserve concerns that consumer prices are drifting further from their target range, making interest rate reductions increasingly unlikely in the near term. During their latest policy meeting last month, certain Fed policymakers expressed support for considering potential rate increases should inflation trends fail to improve.
