US Inflation Comes In Lower Than Forecast, Offering Some Relief

US consumer prices rose at the slowest pace in four months in February, offering some reprieve after months of stalling inflation progress.

The consumer price index increased 0.2% after a sharp 0.5% advance in January, according to Bureau of Labor Statistics data out Wednesday. Excluding often volatile food and energy categories, the so-called core measure rose 0.2% as well.

The BLS said nearly half of the advance in the overall measure was due to shelter.

While Wednesday's report offers some relief, several measures still indicate that inflation is rearing back up again. And with President Donald Trump rolling out a series of tariffs, prices are expected to rise on a variety of goods from food to clothing, testing the resilience of consumers and the broader economy.

In an address to Congress last week, Trump described the higher prices that tariffs are expected to cause as “a little disturbance” the nation ought to be able to overcome. However, the uncertainty around his trade policy has led to a recent meltdown in stock markets and reignited recession fears. Trump sought to downplay those concerns on Tuesday.

The Federal Reserve is patiently sitting in wait-and-see mode until there's more clarity on the administration's actions and the inflation trajectory, with officials widely expected to keep rates steady at next week's meeting. At the same time, growing calls for a downturn have fueled speculation that policymakers may cut rates sooner than previously thought.

US stock futures moved higher, Treasury yields dropped and the dollar pared gains after the report.