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US inflation comes in lower than expected
U.S. inflation eased to 2.8% in February, but rising tariffs under President Trump could push prices higher. The EU retaliated with tariffs on $28.3 billion of U.S. goods, escalating trade tensions.
US consumer prices rose 0.2% in February, the slowest pace in four months.
Inflation may rise again due to tariffs, with the Fed awaiting clarity on policies and inflation.
The EU will impose duties on up to €26 billion of U.S. goods in response to new U.S. metals tariffs.
U.S. inflation shows modest easing
The U.S. consumer price index (CPI) showed a 0.2% increase in February, following a stronger 0.5% jump in January, according to data released by the Bureau of Labor Statistics on Wednesday. Excluding volatile food and energy sectors, the core CPI also rose by 0.2%. This brings the annual inflation rate to 2.8%, down from 3% in January, slightly below economists’ expectations of 2.9%. Meanwhile, core inflation saw a deceleration to 3.1% from 3.3%, also coming in below forecasts of 3.2%.
While the latest data offers some relief, inflationary pressures remain persistent. A combination of rising tariffs and ongoing supply chain challenges has put upward pressure on prices across various sectors, from food to clothing. With President Donald Trump implementing new tariffs, concerns are mounting that the price of goods will continue to climb, testing the resilience of consumers and the broader economy.
In his address to Congress last week, Trump referred to the expected rise in prices from the new tariffs as "a little disturbance" that the country should be able to absorb. However, uncertainty surrounding his trade policies has sent shockwaves through financial markets, prompting concerns about an economic slowdown. Despite the stock market's recent downturn, Trump sought to allay recession fears during a Tuesday statement, signaling his administration's confidence in managing the economic challenges ahead.
In a retaliatory move, the European Union (EU) announced on Wednesday a series of countermeasures against the U.S.'s new metals tariffs. The EU intends to impose duties on up to €26 billion ($28.3 billion) worth of American goods, escalating the ongoing trade tensions. The decision follows the U.S. administration's imposition of a 25% tariff on steel and aluminum imports, marking a significant escalation of the trade dispute between the two allies.
The EU's countermeasures will target goods that are politically sensitive in key Republican-led states, including soybeans from Louisiana, home to House Speaker Mike Johnson, a senior EU official confirmed. Additionally, tariffs imposed on metals during Trump’s first term—previously suspended—are set to be fully reinstated on April 1, including some levies that had never been enforced before.
