Inflation rises more than expected in key report

The core personal consumption expenditures price index – the Federal Reserve’s key inflation measure – increased more than expected in February and consumer spending rose less than expected, according to the Commerce Department.

The consumption index, which excludes volatile food and energy prices, increased 0.4% for the month, the biggest increase since January of 2024, putting the 12-month inflation rate at 2.8%. Economists were expecting a 0.3% rise for the month.

A Bureau of Economic Analysis report showed that consumer spending increased 0.4% for the month, below the 0.5% forecast by economists, as personal income increased 0.8%, compared to an estimate of 0.4%.

Shelter costs increased 0.3%, good prices increased 0.2%, led by recreational goods and vehicles, which increased 0.5%. Services prices were up 0.4%, but gasoline was down 0.8%. The personal saving rate increased to 4.6%, the highest since June 2024.

The Federal Reserve’s stated goal is for inflation to be at 2%, but economists expect President Trump’s tariffs to increase inflation, meaning future interest rate cuts may be in jeopardy.