The February 2025 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, a drop from January’s 0.5% rise. These data were released at 8:30 am EST on Wednesday, March 12, 2025, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.8%, falling from 3.0% in January and 2.9% in December.
The downside surprise was welcome news, as the results missed economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents February’s figures, while the right column represents forecasters’ expectations. As you can see, the red metrics were weaker than anticipated.
Despite that, Fed Chairman Jerome Powell has maintained a wait-and-see approach to rate cuts. On Mar. 7, he said, “The U.S. economy continues to be in a good place. We do not need to be in a hurry and are well-positioned to wait for greater clarity.”
“The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue,” Powell said. “We see ongoing progress in categories that remain elevated, such as housing services and the market-based components of non-housing services.”
As a result, while he noted the “uncertainty” around tariffs and U.S. immigration policy, patience is his preferred approach for the time being.
Used cars and trucks and utility pipelines were primary outliers on the upside this month, while gasoline and transportation services were noticeably weak.
Core inflation (which excludes the impacts of food and energy), rose by 0.2% in February, down from 0.4% in January. And even with the welcome deceleration in shelter — dropping to 0.3% in February from 0.4% in January — the index accounted for “nearly half of the monthly all items increase.”
Food Prices
The food index slowed to 0.2% in February, and four of the six major grocery store food indexes realized deflation:
- Cereals and bakery products (+0.4%)
- Meats, poultry, fish, and eggs (+1.6%)
- Dairy and related products (-1.0%)
- Fruits and vegetables (-0.5%)
- Nonalcoholic beverages (-0.5%)
- Other food at home (-0.5%)
Conversely, the food away from home index rose by 0.4% (surpassing January’s 0.2% rise), as restaurant inflation accelerated in February.
Energy Prices
The energy index rose by 0.2% in February, down from 1.1% in January. Gasoline prices fell by 1%, while natural gas and electricity inflation jumped by 2.5% and 1%.
Core CPI February 2025
The February core CPI rose by 0.2% month-over-month and 3.1% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.3%) [January: +0.4%]
- Rent index: (+0.3%) [January: +0.3%]
- Owners’ equivalent rent: (+0.3%) [January: +0.3%]
- Motor vehicle insurance: (+0.3%) [January: +2.0%]
- Medical care services: (+0.3%) [January: +0.0%]
- Physician services: (+0.4%) [January: +0.1%]
- Hospital services: (+0.1%) [January: +0.9%]
- Airline fares: (-4.0%) [January: +1.2%]
Seasonally Unadjusted CPI Data for February 2025
Before seasonal adjustments, the CPI-U for February 2025 increased by 2.8% Y-o-Y to an index level of 319.082. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Behind the Curve?
With the Fed focused on tariffs and U.S. fiscal policy, some analysts believe the Committee’s unwillingness to cut interest rates could backfire in the future. If the economy is weaker than it anticipates, a ‘behind the curve’ Fed implies that interest rates are too high relative to the fundamental backdrop.
As an unsettling example, Challenger, Gray, and Christmas noted on Mar. 6 that “Job Cuts Surge on DOGE Actions, Retail Woes; Highest Monthly Total Since July 2020.”
The report stated:
“U.S.-based employers announced 172,017 job cuts in February, the highest total for the month since 2009 when 186,350 job cuts were recorded. It is the highest monthly total since July 2020 when 262,649 cuts were announced….
“February’s total is a 245% increase from the 49,795 cuts announced one month prior. It is a 103% increase from the 84,638 cuts announced in the same month last year. So far this year, employers have announced 221,812 job cuts, the highest year-to-date (YTD) total since 2009 when 428,099 job cuts were planned.”
Likewise, Truflation estimates the U.S. CPI is closer to 1.32% Y-o-Y based on its data, and the reading has declined materially in 2025. Thus, if the forecast proves prescient and the labor market weakens, a major shift in rate-cut expectations could unfold in the months ahead.
In the meantime, while stocks have been crushed recently, gold continues to shine bright. In fact, after years of underperformance, the yellow metal is now outperforming cash, bonds, and to a lesser degree, stocks. As such, it’s an excellent diversifier during uncertain periods.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
