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4w ago

Core Inflation Remains at 2.8% in February as Tariff Concerns Loom

The Federal Reserve's preferred inflation measure stays above its 2% target, with new tariffs expected to heighten price pressures and complicate economic policy.

A person shops in a supermarket selling fruit and vegetables in Manhattan, New York City, U.S., March 28, 2022. REUTERS/Andrew Kelly/File Photo
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Shoppers cast shadows as they carry their bags along the waterfront in Portland, Maine, U.S, December 26, 2024. REUTERS/Kevin Lamarque/File Photo

Overview

  • Core PCE inflation, the Federal Reserve's preferred metric, held steady at 2.8% year-over-year in February 2025, according to Commerce Department data.
  • Headline PCE inflation, which includes food and energy prices, was 2.5% in February, aligning with projections.
  • The Federal Reserve has maintained interest rates at 4.25%-4.5% since December 2024, citing persistent inflation above its target.
  • President Donald Trump's tariff policies, including potential reciprocal tariffs, are anticipated to drive inflation higher, adding uncertainty to the economic outlook.
  • The U.S. personal saving rate fell to 4.6% in February, below the historical average of 5.7%, reflecting potential vulnerabilities in consumer financial health.