The inflation rate came down for the first time in months. Across multiple categories of spending, households gained slight economic relief. Could this be an early sign of better economic news on prices? We can hope so.
The consumer price index (CPI)—the government measure of inflation—rose by just 0.2% in February compared with last month and 2.8% annually.
Core prices, which measure prices of volatile goods namely gasoline and food, rose 0.2% from the prior month and 3.1% on an annual basis. Importantly, all of these readings came in below expectations.
Households can take comfort that the inflation rate on many everyday goods has also fallen:
- Energy prices decelerated by -0.2% on an annual basis in February compared to rising 0.97% in January.
- Prices for fruits and vegetables as well as nonalcoholic beverages declined by 0.5% in February. Dairy prices saw a larger decline of 1% for the month.
- Gasoline prices were down -3.1% in the past year, even greater than the -0.2% annual decline in January.
- Shelter prices, the largest component of the inflation reading, rose 4.2% in February year-over-year, down from 4.4% in January and the lowest price increase since December 2021.
However, prices on some goods are of concern.
- Egg prices were up 10.4% in February, and 59% higher than this time last year, by far the largest increase for any item in February.
- Food prices year-over-year accelerated from 2.5% to 2.6%.
Deceleration in energy prices is a positive signal that high prices on the energy, which fuels our vehicles, heats our homes, and delivers goods, are receding.
Inflation on producer prices also showed signs of slowing last month.
Slowing inflation on shelter also provides relief as households won’t have to pay as much for the basic need to keep a roof over their heads. Additionally, the average 30-year fixed mortgage rates have fallen for seven straight weeks, which should encourage would-be home buyers into the market.
Still, there is much more work to do. Overall prices are still 21% higher now than when President Trump left office at the start of 2021 due to four years of the Biden inflationary agenda. The economy has been hyperinflated by multi-trillion-dollar spending bills that expanded the federal government’s size and reach. Employment data appeared strong, but most new jobs added over the past two years were by the federal government or federal spending.
Cutting wasteful federal spending and paring back on costly partisan priorities such as green energy mandates on household items is a cost-saving agenda for women and families. A White House report finds that President Trump’s deregulation efforts since taking office saved Americans $180 billion—or $2,100 in savings for a family of four.
- Central air conditioners: Biden rules were slated to make air conditioners $1,100 more expensive.
- Gas water heaters: Biden rules were slated to make water heaters $2,800 more expensive.
- Gas stoves: Biden rules were slated to make stoves $3,250 more expensive.
- Clothes washers and dryers: Biden rules were slated to make washers $200 more expensive.
- Light bulbs: Biden rules were slated to make light bulbs $140 more expensive.
Many worry that the new slate of U.S. tariffs may undermine inflation by imposing new costs of sundry goods we import. Those fears have driven a turbulent week in the stock market.
Two things remain to be seen: (1) how much of the tariffs get passed onto consumers versus eaten by producers and (2) the consumers’ appetite to swallow price increases in advance of other goals such as national security, fairer trade deals, reshoring of production, and increased domestic hiring.
In addition, halting a historic tax hike will allow Americans to earn more, keep more of what they earn, and keep their taxes simple. The 2017 Trump tax cuts are set to expire this year, leading to a 22% hike for average taxpayers. This is a high priority for President Trump and Congress. It will boost the economy, strengthen small businesses, and prosper households. Learn more at independentwomen.com/tax-cuts.
Falling prices, falling mortgage rates, savings from deregulation, and tax cuts are powerful outcomes that we hope will continue.