This is a developing story about the February 2026 consumer price index. Please check back for updates.

Inflation remained elevated in February as the pace of consumer price growth stayed above the Federal Reserve’s target rate as policymakers weigh affordability concerns.

The Bureau of Labor Statistics on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.3% on a monthly basis in February and held steady at 2.4% on a year-over-year basis. The annual figure was unchanged from January, while the monthly gain was slightly higher than last month’s 0.2% reading.

Expectations vs. reality

Both figures were in line with the expectations of economists polled by LSEG.

So-called core prices, which exclude volatile measurements of gasoline and food to better assess price growth trends, were up 0.2% from the prior month and rose 2.5% from a year ago. Those figures were in line with economists’ expectations.

The monthly core CPI figure was slightly cooler than January’s 0.3% reading, while the annual figure was unchanged from last month.

FED OFFICIALS CLOSELY MONITOR IRAN CONFLICT FOR POTENTIAL INFLATION IMPACT

Economists have noted that inflation data from December 2025 through April 2026 will be affected due to data collection interruptions resulting from last fall’s 43-day government shutdown.

During the shutdown, the BLS wasn’t able to gather data and used a carry-forward methodology to make up for the lack of an October CPI report and missing data in November’s report. Economists say that going forward this is likely to impart a downward bias on inflation data until this spring, when fresh data will negate the discrepancy.

The cost of living breakdown

High inflation has created severe financial pressures in recent years for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paychecks on necessities and have less flexibility to save.

Food prices increased 0.4% in February and were up 3.1% from a year ago. The food at home index was up 0.4% for the month and 2.4% from last year, while the food away from home index rose 0.3% on a monthly basis and is 3.9% higher than a year ago. Monthly price increases for each category rose from 0.2% in January.

HOW THE IRAN WAR COULD HIT AMERICANS’ GROCERY BILLS

Inflation held steady in February, remaining elevated above the Fed’s target. (Justin Sullivan/Getty Images / Getty Images)

Meats, poultry and fish prices increased 0.2% in February and are up 6.8% from a year ago. Beef and veal prices jumped 1.5% for the month and are up 14.4% on an annual basis. Egg prices continued to decline following an avian flu outbreak that impacted supply, with prices down 3.8% for the month and 42.1% from a year ago. The fruits and vegetables index increased 1.4% in February and is 2.7% higher than a year ago.

Energy prices were up 0.6% in February but are up just 0.5% from last year. Gasoline prices increased 0.8% in February but were down 5.6% compared with the same month a year ago. Utility gas service prices rose 3.1% in February and are up 10.9% from a year ago. Electricity prices declined 0.7% in February and are 4.8% higher than a year ago.

Housing prices rose 0.2% in February and are up 3% from last year, as the BLS noted the shelter index was the largest factor in the overall monthly CPI increase. Tenants’ and household insurance prices were little changed and up just 0.1% in February, but have risen 6.2% in the last year.

OIL SPIKE FADES AS MARKETS REASSESS IRAN WAR SUPPLY RISKS

Transportation services prices were up 0.2% for the month and 2.2% in the last year. Motor vehicle maintenance and repair prices increased 0.9% in February and were up 5.6% from last year. Auto insurance prices declined 0.3% for the month and are up 0.2% over the past year. Airline fares rose 1.4% in February and have increased 7.1% from a year ago.

Medical care services rose 0.6% in February and are up 4.1% over the past 12 months. Prices for personal care services were up 0.3% on a monthly basis and 4.9% on an annual basis.

Household furnishings increased 0.2% for the month and 3.9% in the last year. Furniture and bedding prices were flat for the month but have risen 4.2% from a year ago. Prices for appliances rose 3.1% in February but are up 2.9% from a year ago.

Federal Reserve Chair Jerome Powell and central bank policymakers are monitoring economic data as they weigh potential interest rate cuts. (Chip Somodevilla/Getty Images / Getty Images)

Expert analysis

“Before the war in Iran sent gas prices spiking, inflation was starting to look a bit better. February’s inflation reading of 2.4% is one of the lowest in the past five years, but it won’t stay that way with gas prices surging above $3.50 a gallon,” said Heather Long, chief economist at Navy Federal Credit Union.

“A steady inflation reading would probably be a welcome data point on any other day, but against the current backdrop of geopolitical uncertainty and surging oil prices, it may not carry as much weight in the markets – or with the Fed,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. 

“Despite the prospect of releasing oil reserves, continued uncertainty translates into continued upside risk for oil prices, and that translates into a Fed that will remain cautious about cutting interest rates,” Zentner added.

What it means for the Fed

The Federal Reserve is set to hold its next monetary policy meeting next week on March 17-18, when it will announce its latest interest rate decision.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

The market’s expectations that the Fed will leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75% were reinforced by the February CPI inflation report.

The probability of the Fed holding rates steady rose to 99.3%, up from 98.3% a week ago and 93.6% last month, according to the CME FedWatch tool.