US consumers remained cautious about spending last month as inflation ticked higher
By CHRISTOPHER RUGABER, AP Economics Writer
WASHINGTON (AP) — Inflation picked up last month and consumers barely raised their spending, signs that the economy was already cooling even before most tariffs were imposed.
Friday’s report from the Commerce Department showed that consumer prices increased 2.5% in February from a year earlier, matching January’s annual pace. Excluding the volatile food and energy categories, core prices rose 2.8% compared with a year ago, higher than January’s figure of 2.7%.
Economists watch core prices because they are typically a better guide of where inflation is headed. The core index has barely changed in the past year. Inflation remains above the Federal Reserve’s 2% target, making it difficult for the central bank to cut its key interest rate anytime soon.
The report also showed that consumer spending rebounded last month after falling by the most in four years in January. Yet much of the additional spending reflected price increases, with inflation-adjusted spending barely rising. The weak figure suggests growth is rapidly slowing in the first three months of this year as consumers and businesses turn cautious amid sharp changes in government policies.