US inflation cooled last month, though trade war threatens to lift prices

WASHINGTON (AP) — U.S. inflation slowed last month for the first time since September even as additional tariffs on steel and aluminum that kicked in Wednesday threaten to send prices higher.

The consumer price index increased 2.8% in February from a year ago, Wednesday’s report from the Labor Department showed, down from 3% the previous month. Core prices, which exclude the volatile food and energy categories, rose 3.1% from a year earlier, down from 3.3% in January. The core figure is the lowest in nearly four years.

The declines were larger than economists expected, according to a survey by data provider FactSet. Yet they remain higher than the Federal Reserve’s 2% target. Sticky inflation could create problems for President Donald Trump, who promised during last year’s campaign to “knock the hell out of inflation.”

And with Trump imposing — or threatening to impose — a wide range of tariffs on imports from Canada, Mexico, China, Europe and India, most economists forecast price growth will likely remain elevated this year.

The duties have roiled financial markets and could sharply slow the economy, with some analysts raising the odds of a recession. Many economists expect inflation would fall this year without the import taxes, but with tariffs imposed, they forecast inflation will stay elevated through the end of this year.