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By Hugh Cameron
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New Department of Labor data has revealed that prices rose at a steady pace last month, but analysts fear the new conflict in the Middle East could drive up inflation well into 2026.
On Wednesday morning, the Bureau of Labor Statistics (BLS) found that the headline annual rate of inflation remained flat at 2.4 percent in February, while the monthly rate increased to 0.3 percent from 0.2 percent, in line with analysts' expectations. This compares to 3 percent and 0.4 percent, respectively, when President Donald Trump returned to the White House last January.
Separately, core inflation—which excludes the more volatile food and energy categories—remained at 2.5 percent year-over-year, while the monthly rate ticked down to 0.2 percent from 0.3 percent.
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Why It Matters
The figures are in line with forecasts and closely resemble those contained in January’s report, which had assuaged many analysts’ fears that the United States was slipping toward a downturn and was framed by the Trump administration as validating his economic agenda.
However, the data was gathered prior to the Iran strikes, which began on February 28, and capture conditions before Operation Epic Fury and Tehran’s retaliation—developments which experts warn could reignite inflation as gas and other essentials rise on the back of a rally in global oil prices.
What To Know
Housing costs drove many of last month’s increases, according to the BLS, with prices rising 0.2 percent. The food index rose by 0.4 percent as the energy index climbed 0.6 percent.
Within the energy index’s 0.6 percent gain, the gasoline index increased 0.8 percent over the month in February. But retail prices have soared in March and now sit at around $3.60 per gallon, according to data from AAA and GasBuddy, the highest level since 2024.
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Brent crude—the international benchmark—has risen sharply after Tehran effectively shut down transit through the crucial Strait of Hormuz. Prices rose to nearly $120 a barrel, but have since climbed down to around $91 after Trump suggested the conflict could be short-lived.
"Higher oil prices have already lifted gasoline prices, and with higher diesel and jet fuel prices, inflation for other goods and travel will soon rise," Mark Zandi, chief economist at Moody's Analytics, told Newsweek earlier this week, adding that this will "hurt consumers' willingness and ability to spend, particularly by lower and middle-income households."
Prices also rose notably in several other categories last month, including home health care and airline fares, which are up 15 percent and 7.1 percent year-over-year, respectively.
But many others experienced significant drops in February, with egg prices falling 3.8 percent from January and 42.1 percent over the previous 12 months.
What People Are Saying
Bernard Yaros, Lead US Economist at Oxford Economics, said in a note following the release: "The February consumer price index is unlikely to move the needle on the outlook for monetary policy, as it's only just a snapshot of prices immediately before the US/Israel-Iran war, which will lead to much stronger headline inflation in March."
Alexandra Wilson-Elizondo, Co-Chief Investment Officer for Multi-Asset Solutions at Goldman Sachs, quoted by The Hill: "This is a welcomed number on the surface, but one that may already be outdated. February’s data was collected before the conflict in Iran sent crude oil surging roughly 30 percent, with natural gas, aluminum, fertilizer, freight rates, and shipping insurance moving higher with it."
“The Strait of Hormuz remains the wildcard, and if disruption is sustained, the inflation improvement embedded in today’s print could reverse quickly,” she added.
What Happens Next
While oil prices have eased in recent days, they remain elevated compared to before Operation Epic Fury began, and some analysts expect these effects, if sustained, to materially push up inflation well into 2026.
The Federal Open Market Committee will meet next week to decide on its next rate cut. However, the central bank is expected to keep its target rate unchanged, as policymakers grapple with the monetary implications of the conflict and last week's weaker-than-expected jobs report.
Update 3/11/26, 9:58 a.m. ET: This article was updated with additional information.
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