US consumer inflation unchanged but price shocks from Iran war loom

February’s year-on-year inflation figure was near its lowest levels over the past 12 months, but consumers in the United States continue to grapple with prices that have remained stubbornly high post-pandemic.

US inflation hit a high of 9.1 per cent in June 2022, and while it has dropped from those levels, years of elevated prices have battered households across the country.

The Federal Reserve, which has a dual mandate to address inflation and unemployment, raised interest rates to control flaring prices and while it is now in a rate-cutting phase, they remain at elevated levels.

The new CPI figure will be a factor in the Fed’s discussion at a meeting to set rates next week. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, will be released later this week.

The central bank has a long-term goal of two percent for US inflation, but is also battling weakness in the labor market.

The United States unexpectedly lost jobs in February while unemployment edged up, government data showed last week, piling pressure on Trump’s economic agenda as crucial midterm elections approach.

Affordability has been a key issue, and the weaker jobs numbers have turned up the heat on criticism of Trump’s economic policies.