Key Inflation Gauge Remains Elevated Before Iran War

Got story updates? Submit your updates here. ›

A key measure of inflation stayed high in February, before the war in Iran spiked gas prices, a sign that everyday costs were elevated even before the conflict began. The inflation gauge monitored by the Federal Reserve rose 0.4% in February from January, up slightly from the previous month. Compared with a year ago, prices rose 2.8%, the same as January.

Why it matters

The elevated inflation data from February will heighten concerns at the Federal Reserve that prices are moving further away from their 2% inflation target, making it less likely the central bank will cut interest rates anytime soon.

The details

Excluding the volatile food and energy categories, core inflation also rose 0.4% in February from January, and it was 3% higher than a year earlier. The monthly increases are at a pace that if continued for a whole year, would easily top the Fed's 2% inflation target. The more important consumer price index for March, which will reflect the impact of the gas price spike from the Iran war, is expected to show a big increase of 0.9% just in March from February, and a 3.4% gain from a year earlier.

• The February inflation data was delayed by a backlog of economic reports created by the six-week government shutdown last fall.
• The March consumer price index data will be released on Friday.

What’s next

The large jump in inflation in March will heighten concerns at the Fed that prices are moving further away from their inflation target and make it much less likely the central bank will cut rates anytime soon.