US inflation slowed more than expected in February, with core inflation posting its smallest gain since 2021 — although the data was gathered before President Trump began to amp up his tariff wars this month.
The Consumer Price Index rose 2.8% over the past 12 months — below the 2.9% gain that economists had expected and also below last month’s surprisingly strong 3% reading, the Bureau of Labor Statistics said Wednesday.
Core CPI, which excludes volatile food and energy prices, came in at 3.1% — the lowest reading since April 2021.
Dow Jones futures rose 223 points, or 0.5%, on the softer inflation report. S&P 500 futures jumped 0.8% higher, and Nasdaq 100 futures gained about 0.9%.
The less heated report comes as inflation concerns have mounted over President Trump’s trade policies, and investor optimism for interest rate cuts anytime soon has dipped.
However, February’s report does not capture the impact from Trump’s tariffs.
President Trump’s threatened tariffs on Canada and Mexico — which are currently on a second 30-day pause — and his 20% levy on China have spurred fears of inflation and a possible recession.
Trump’s 25% tariffs on steel and aluminum imports took effect early Wednesday morning. The European Union announced retaliatory tariffs that will take hold in April.
Heightened trade tensions have spooked investors and stoked volatility in the markets.
The “Magnificent 7” tech stocks — Tesla, Nvidia, Alphabet, Meta, Amazon, Apple and Microsoft — have shed more than $1.5 trillion off their combined valuation since the start of 2025 after enjoying huge gains last year.
Heated consumer and producer price reports early last month had some economists warning that rate hikes could even be on the table.
But the personal consumption expenditures index — the Fed’s preferred inflation gauge — signaled easing inflation later that month.
The Federal Open Market Committee is set to meet on March 18-19, when investors largely expect they’ll keep interest rates the same in the target 4.25% to 4.5%, according to CME FedWatch.
