U.S. Consumer Price Index (February 2026)

Inflation progress slows ahead of oil shock

• The Consumer Price Index (CPI) rose 0.3% month-on-month (m/m) in February, meeting the Bloomberg consensus forecast. On a twelve-month basis, CPI was unchanged at 2.4%. 
  • Energy costs rose 0.6% m/m, amid some firming in prices at the pump and utility costs. Food prices also heated up in February, rising 0.4% m/m following a softer gain of 0.2% the month prior. The uptick was driven by an acceleration in both grocery costs and "food away from home".
• Excluding food and energy, core inflation rose 0.2% m/m, a tick lower than the month prior. On a twelve-month basis, the core measure held steady at 2.5%, though over the past three months it is running a bit hotter at a 3.0% annualized pace. 
• The softening in the monthly core reading was due to a cooling in services inflation, largely the result of an easing in travel related costs and a pullback in recreational services. Meanwhile, primary shelter costs rose roughly in line with January's increase, pushing the year-ago measure for core services inflation down to 2.9%.
• Core goods prices rose a 'soft' 0.1% m/m, following flat readings in each of the two prior months. Apparel prices jumped 1.3% m/m, while home furnishings and recreational goods also recorded gains, which were largely offset by a sharp decline in education & communication goods (-3.0% m/m) and a further pullback in used car prices (-0.4% m/m).

Key Implications

• This morning's inflation report feels a bit backward looking following recent geopolitical developments. Perhaps the most notable takeaway is that even before the recent spike in oil prices, progress on the inflation front was already showing signs of petering out. 
• Looking ahead, we don't see much more room for services inflation to cool, while further tariff passthrough and secondary effects from higher oil prices are two-sources of upside risk to the inflation outlook. For now, this leaves the Federal Reserve in a holding pattern, unless the labor market were to show further signs of softening in the months ahead. 

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