Topline
Americans got much welcomed relief from inflation as the Consumer Price Index unexpectedly declined to 2.8% in February after rising for the past five months, and in more good news, egg prices, the yardstick of the post-election inflation spike, dropped by 32% in March, according to USDA data compiled by Trading Economics.
Key Facts
Egg prices, which soared nearly 60% from February a year ago, dropped sharply in March from over $8 a dozen at the beginning of the month to $5.51 on Tuesday, March 11.
In another positive sign, shelter costs rose 4.2% from a year ago on an unadjusted basis, the smallest annual monthly increase since December 2021.
The inflation rate for food at home was well under the overall CPI in February, reaching 1.9%, while restaurant prices continued to track above, rising 3.7%.
Energy prices dropped 0.2%, with both fuel oil and gasoline down 5.1% and 3.1%, respectively.
Prices for household furnishing and supplies dropped 0.4%, led by declines in dishes and flatware (-9.2%), cookware and tableware (-5.6%), floor coverings (-5.6%), bedroom furniture (-5%) and major appliances (-4%).
Apparel prices only rose 0.6%, though it cost more to dress the kids, with boys’ apparel up 4.5% and girls’ 4.6%, and men’s suits, sports coats and outwear cost 4% more and the price for jewelry rose 4.3%.
New car prices dropped 0.3% and shoppers got a reprieve when buying televisions (-8.8%), computers (-6%) and smartphones (-13.7%), while prescription drug prices rose 4.6%.
Service prices remain a sticking point, with transportation services up 6%, recreation services, including cable, satellite and streaming television services, rising 4.3%, medical services at 3% and hospital services up 3.6%.
Insurance costs continue to rise, including health insurance up 3.9%, motor vehicle insurance rising 11.1% and household insurance up 3%.
Background
The February CPI came in lower than experts expected and down from 3% in January. The inflation rate started to climb after dropping to 2.4% in September 2024, the lowest level since March 2021. The positive CPI news helped reverse the recent stock market decline. The S&P 500 ended up 0.5% and the Nasdaq 100 climbed 1.1% in yesterday’s trading, though the Dow Jones Industrial Average dipped 0.2%.
Core Inflation Reaches Lowest Level In Four Years
Core inflation, considered the best measure of overall inflation since it takes out more volatile food and energy prices, declined to its lowest level in four years. Core inflation dropped to 3.1% in February. It was at 3% in April 2021, then began its dramatic rise.
Tangent
The Conference Board reported that its Measure of CEO Confidence rose in the first quarter 2025 at the highest level seen over the past three years. Calling the improvement in CEO confidence “significant and broad-based,” Stephanie Guichard, senior economist at The Conference Board, reported all components of the Measure improved, including cyber threats, regulatory uncertainty, financial and economic risks, and supply chain disruptions. The sole exception was geopolitical instability, which remains a high-impact risk according to a majority of the 134 CEOs surveyed. The Measure also found a “notable increase” in CEOs expecting to increase investment plans and a decline in the share expecting to downsize investments.
Contra
The on-again, off-again Trump tariffs and their impact on prices remain a wild card. “It’s worth remembering that this may be the calm CPI report before the storm,” wrote Principal Asset Managements chief global strategist Seema Shah in a research note and warned the inflation picture “potentially getting uglier as the months go on,” as reported by NBC News.
Crucial Quote
“The economy is moving in the right direction under President Trump,” posted White House press secretary Caroline Leavitt on X. “This inflation report, much like last week’s jobs report, is far better than the media predicted and the so-called ‘experts’ expected. When will they learn to stop doubting President Trump?”
Further Reading
Stocks Rise After CPI Surprise as Trade Risks Loom: Markets Wrap (Bloomberg, 3/12/2025)
Price Growth Cooled More Than Expected In February, Before Trump Ramped Up Tariffs (NBC News, 3/12/2025)
CEO Confidence Increased Sharply in Q1 2025 (The Conference Board, 2/20/2025)