US inflation held steady at 2.4 per cent in February, matching economists’ expectations, although the data was set to be overshadowed by the energy shock unleashed by the war in the Middle East.
Wednesday’s headline consumer price index figure from the Bureau of Labor Statistics was unchanged from January’s year-on-year rate.
Core inflation, stripping out volatile food and energy prices, was also flat at 2.5 per cent, in line with Wall Street forecasts.
The period covered by the release was before energy prices surged over the past two weeks in the fallout from the Iran war, which is expected to push up inflation when March data is released.
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“The February consumer price index (CPI) is unlikely to move the needle on the outlook for monetary policy, as it’s only just a snapshot of prices immediately before the US-Israel-Iran war, which will lead to much stronger headline inflation in March,” said Bernard Yaros at Oxford Economics.
The inflation figures drew a muted reaction from investors, with the yield on the 10-year Treasury little changed at 4.18 per cent.
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Oil prices have moved sharply higher since the US and Israel launched strikes on Iran almost two weeks ago, with Brent crude, the international benchmark, up about a quarter and US marker West Texas Intermediate up about 30 per cent.
The increase has pushed up petrol prices in the US for 11 days straight. The US energy department forecast this week that prices at the pump were unlikely to return to pre-war levels before the end of next year.
Stephen Brown, deputy chief North America economist at Capital Economics, estimated that if crude prices remained around their current levels, inflation was likely to jump to 2.9 per cent in March.
Wednesday’s inflation data release comes ahead of a meeting of the Federal Reserve next week, when the central bank is expected to hold interest rates in a range of 3.5 per cent to 3.75 per cent.
The surge in energy prices has prompted traders to scale back their expectations for rate cuts from the Fed, with traders now betting on one or two quarter-point cuts compared with the two or three that were anticipated before the war.
“While Wednesday’s CPI for February does not account for the recent spike in oil prices, the print was in line with expectations, suggesting that inflation was stable before the Iran conflict,” said Skyler Weinand, chief investment officer at Regan Capital.
Energy inflation was just 0.5 per cent in the 12 months to February, with petrol prices falling 5.6 per cent over the period. Analysts expect this part of the index to escalate significantly in March.
Housing-related inflation, which held steady at 3 per cent, was the most significant contributor to the February inflation figure. – Copyright The Financial Times Limited 2026
