U.S. Consumer Prices Rise Less Than Expected In February, Annual Growth Slows

(RTTNews) - A report released by the Labor Department on Wednesday showed consumer prices in the U.S. increased by slightly less than expected in the month of February.

The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.

The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.

The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.

"Inflation is moving in the right direction, which makes the Fed more likely to cut rates again in coming months," said Bill Adams, Chief Economist for Comerica Bank. "At the same time, the dizzying back-and-forth over tariffs is a large and unpredictable upside risk to the inflation outlook."

He added, "The policy changes day to day and minute to minute, but the high-level takeaway is that tariff rates look likely to be higher in the second half of 2025 than they were in the first."

The modest monthly increase by consumer prices largely reflected a continued advance by shelter costs, which rose by 0.3 percent in February after climbing by 0.4 percent in January.

Meanwhile, the Labor Department a 4.0 percent nosedive by prices for airline fares and a 1.0 percent slump by prices for gasoline helped limit the upside.

Despite the decrease by prices for gasoline, energy prices rose 0.2 percent over the month as prices for electricity and natural gas increased.

Prices for food also edged up by 0.2 percent in February amid a 0.4 percent increase by prices for food away from home.

On Thursday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of February.

Economists currently expect the producer price index to rise by 0.3 percent in February after climbing by 0.4 percent in January. The annual rate of producer price growth is expected to slow to 3.3 percent from 3.5 percent.