“Today’s CPI report shows inflation is declining and the economy is moving in the right direction under President Trump,” said a Wednesday statement from White House Press Secretary Karoline Leavitt. “Core consumer prices, which is the best measure of inflation, dropped to its lowest level in FOUR years.”
According to that Consumer Price Index report for February from the Bureau of Labor Statistics, the CPI for all urban consumers did increase, but by just 0.2%, lower than January’s 0.5% increase. That brings inflation for the past 12 months to 2.8%, lower than the 3% figure reported from January. Still, that figure is higher that the Federal Reserve Banks’s 2% inflation target.
Shelter accounted for nearly half of the increase last month – it rose 0.3%, per the BLS. That increase was partially offset by a 4% decrease in the index for airline fares and a 1% decline in the index for gasoline, though energy overall did increase by 0.2%, as did the food index.
While the White House celebrated the February CPI report as a win, and said that inflation “eased more than expected,” concerns are swirling in the wake of President Donald Trump’s tariff war, that has brought economic uncertainty. Gus Faucher, senior vice president and chief economist of The PNC Financial Services Group in Pittsburgh, Pa., joined Audacy this week to talk about the CPI report and those looming concerns.
“I think the big concern is how do tariffs impact the inflation outlook,” he said in an interview for the Noon Business Hour. “So, I think given the momentum in the economy, we would expect to be seeing slower inflation going forward. But I think we are going to see some businesses raising their prices, either prices of imports or, you know, U.S. producers who see less competition from abroad, and that will allow them to increase their prices. So, I think that this slowing in inflation is only temporary.”
Faucher said that consumers might also hold off on purchases due to the economic uncertainty – another factor that could drag economic growth going forward. However, he doesn’t think we’ll see a return to the peak inflation rates of around 9% that showed up in 2022 as the nation was still reeling from the impact of the COVID-19 pandemic.
“I think what we’re likely to see is not… a big resurgence in inflation, but that inflation is going to be stuck above the Fed’s 2% objective in the near term,” Faucher explained. “You know, it’s going to be – businesses are going to have the incentive to raise prices with higher tariffs, and so that means that we will see prices going up a little more quickly than they otherwise would have. In terms of the impact on growth, the longer the tariffs last, the more they’re negative on growth and more there are negative on job growth as well.”
Trump also touted the recent jobs report as a win, highlighting an increase in manufacturing jobs.
As inflation comes down, the Federal Reserve Bank is more likely to bring down interest rates. These rates make it more expensive to borrow money, and were used in an effort to cool spending and bring high inflation down.