US Inflation Remains Elevated Amid Consumer Spending Increase

In February, consumer prices in the U.S. rose 2.5% year-over-year, maintaining the same pace as January, while core prices, excluding food and energy, increased by 2.8%. This inflation remains above the Federal Reserve's 2% target, complicating potential interest rate cuts. Consumer spending, which had sharply declined in January, rebounded by 0.4% in February, driven largely by purchases of durable goods ahead of anticipated tariffs. Despite the uptick in spending, inflation-adjusted figures indicate only a marginal increase of 0.1%, suggesting cautious consumer behavior. Economists warn that President Trump's tariffs may lead to further inflationary pressures, with forecasts indicating slower growth and sustained inflation. The Fed's Chair has downplayed these concerns, describing the inflation from tariffs as potentially temporary.