A snapshot from Los Angeles on February 26, 2025, offers a glimpse of eggs neatly displayed for sale, taken by Eric Thayer for Bloomberg through Getty Images.
In a welcomed shift, inflation showed signs of easing this past February, driven by reduced price pressures for staples like gasoline, groceries, and housing. However, concerns linger over the potential impact of President Donald Trump’s tariff measures, which could hinder this progress.
According to the U.S. Bureau of Labor Statistics, the consumer price index (CPI) saw a 2.8% increase over the 12 months ending in February, slightly lower than the previous month’s 3%. This slowdown is a positive indicator, especially after recent worries that inflation might be becoming a persistent issue, not aligning with targets.
Michael Pugliese, a senior economist at Wells Fargo Economics, shared his insights, noting, “Progress is bumpy. It’s not a linear path down. We still face risks, but there are no signs of acceleration according to current data.” The CPI essentially tracks the rate at which prices change for a broad range of goods and services, like haircuts, coffee, clothing, and concert tickets.
While the CPI inflation rate has significantly dropped from its high of 9.1% during the pandemic’s peak in June 2022, it still exceeds the Federal Reserve’s long-term objective of a 2% annual rate.
When discussing future inflation trends, Pugliese comments, “Barring major policy changes, I expect inflation to continue its gradual decline.” Yet, many are pondering what significant policy shifts might occur this year.
Recently, President Trump announced another series of tariffs on foreign steel and aluminum, prompting retaliatory actions from Europe on around $28 billion worth of U.S. goods starting in April. This move adds to the tariffs already levied against key trading partners like Canada, China, and Mexico.
Economists point out that these tariffs, essentially a tax on U.S. importers, raise costs for businesses and eventually consumers. Items heavily reliant on steel such as cars, homes, and machinery might see price hikes. While there are further proposed tariffs, their implementation and duration remain uncertain.
Looking closer at specific items, the cost of eggs shot up by a staggering 59% over the previous year, marking the largest increase for any commodity in February. This spike is attributed to an avian flu outbreak that killed millions of egg-laying chickens, drastically cutting supply. Additionally, the U.S. Justice Department is investigating potential antitrust concerns over the soaring prices.
Instant coffee prices also climbed by roughly 9% over the past year. This rise is largely due to climate change-induced weather issues, like droughts in key producing regions such as Brazil, impacting coffee bean supplies. Despite this, overall grocery inflation stayed moderate at 1.9% over the past year.
Gasoline prices followed a controlled trend in February, showing a 1% decrease from January to February and a 3% drop over the last year.
The cost of shelter, a critical part of the CPI, saw an annual inflation rate of 4.2% in February, the lowest since December 2021. Gargi Chaudhuri from BlackRock noted, “Housing inflation tends to be the most persistent, meaning it’s slower to shift away from established trends. Yet, the recent price movements in the housing sector give us hope for a favorable inflation path.”
