Former JP Morgan Chase Chief Economist Anthony Chan analyzes the rise in oil prices on ‘Varney & Co.’
This is a developing story on the February 2026 Consumer Price Index. Check back for updates.
Inflation remained elevated in February as the pace of consumer price growth remained above the Federal Reserve’s target interest rate amid policymakers’ concerns about affordability.
The Bureau of Labor Statistics said Wednesday that the consumer price index (CPI) — a broad measure of the cost of everyday goods such as gasoline, groceries and rent — rose 0.3% month-over-month in February and held steady at 2.4% year-over-year. The annual figure remained unchanged from January, while the monthly gain was slightly higher than last month’s 0.2%.
Expectations versus reality
Both figures were in line with the expectations of economists polled by LSEG.
So-called core prices, which exclude volatile measures of gasoline and food to better assess price growth trends, rose 0.2% from the previous month and rose 2.5% from a year ago. These figures were in line with economists’ expectations.
The monthly core CPI figure was slightly cooler than January’s 0.3%, while the annual figure was unchanged from last month.
FED officials are closely monitoring the conflict in Iran for possible inflationary impacts
Economists have noted that inflation data from December 2025 through April 2026 will be affected by data collection disruptions caused by last fall’s 43-day government shutdown.
During the shutdown, the BLS was unable to collect data and used a carry-forward methodology to compensate for the lack of an October CPI report and missing data in the November report. Economists say this is likely to have a downward impact on inflation rates going forward until this spring, when new data will negate the discrepancy.
The distribution of the costs of living
High inflation in recent years has put severe financial strain on most American households, who are forced to pay more for daily necessities such as food and rent. Price increases are especially difficult for lower-income Americans, because they tend to spend more of their already tight paychecks on necessities and have less flexibility to save.
Food prices rose 0.4% in February and were 3.1% higher than a year ago. The index for eating at home rose 0.4% and 2.4% this month compared to last year, while the index for eating away from home rose 0.3% month-on-month and is 3.9% higher than a year ago. Monthly price increases per category increased from 0.2% in January.
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Inflation held steady in February and remained above the Fed’s target. (Justin Sullivan/Getty Images/Getty Images)
Prices for meat, poultry and fish rose by 0.2% in February and are 6.8% higher than a year ago. Beef prices rose 1.5% this month and are up 14.4% year over year. Egg prices continued to fall after an outbreak of bird flu affected supply. Prices fell by 3.8% and 42.1% this month compared to a year ago. The fruit and vegetable index rose by 1.4% in February and is 2.7% higher than a year ago.
Energy prices rose by 0.6% in February, but are only up 0.5% compared to last year. Gasoline prices rose 0.8% in February, but fell 5.6% compared to the same month a year ago. Gas prices rose by 3.1% in February and are 10.9% higher than a year ago. Electricity prices fell by 0.7% in February and are 4.8% higher than a year ago.
Home prices rose 0.2% in February and are up 3% from last year as the BLS noted that the shelter index was the largest factor in the overall monthly CPI increase. Prices for renters and home contents insurance have changed little, rising just 0.1% in February, but are up 6.2% over the past year.
The oil boom fades as markets reassess the risks of Iran’s war bid
Prices for transportation services rose 0.2% this month and 2.2% over the past year. Motor vehicle maintenance and repair prices rose by 0.9% in February and were 5.6% higher than last year. Car insurance prices fell 0.3% this month and have risen 0.2% over the past year. Airfares rose 1.4% in February and are up 7.1% from a year ago.
Medical care services increased 0.6% in February and 4.1% over the past twelve months. Prices for personal care services rose 0.3% month-over-month and 4.9% year-over-year.
Home furnishings rose 0.2% this month and 3.9% last year. Furniture and bedding prices remained stable this month, but increased 4.2% from a year ago. Appliance prices rose 3.1% in February, but are up 2.9% from a year ago.
Federal Reserve Chairman Jerome Powell and central bank policymakers are monitoring economic data as they weigh possible rate cuts. (Chip Somodevilla/Getty Images/Getty Images)
Expert analysis
“Before the war in Iran caused gas prices to rise, inflation was starting to look a little better. February’s 2.4% inflation rate is one of the lowest in the past five years, but that won’t stay that way as gas prices rise above $3.50 a gallon,” said Heather Long, chief economist at Navy Federal Credit Union.
“Stable inflation would probably be a welcome data point on any other day, but against the current backdrop of geopolitical uncertainty and rising oil prices, it may not carry as much weight in the markets — or at the Fed,” said Ellen Zentner, chief economic strategist at 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 will hold its next monetary policy meeting next week on March 17 and 18, where it will announce its latest interest rate decision.
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Market expectations that the Fed will leave the Fed Funds rate unchanged at its current range of 3.5% to 3.75% were reinforced by February’s CPI inflation report.
According to CME’s FedWatch tool, the probability that the Fed would hold rates steady rose to 99.3%, up from 98.3% a week ago and 93.6% last month.
