February CPI preview: The tariff winds start to blow

Summary

Consumer price inflation came out of the gate strong in 2025, but price growth looks to have cooled somewhat in February. We estimate headline CPI rose 0.25% and the core index advanced 0.27%. The moderation in the core index is likely to reflect some giveback in a handful of categories that soared in January (e.g., prescription drugs, used cars, motor vehicle insurance and recreation services) and lead to softer monthly prints for both core goods and services. However, we believe growing concerns over tariffs are already affecting pricing decisions and will help to keep the pace of consumer price inflation firm overall.

Despite moderation in February, CPI inflation to remain firm

The January CPI report carried echoes of 2024 with the first key inflation read of the year coming in hot. Unlike last year, however, we expect it to be followed up by a more temperate gain in February. Headline CPI likely increased by about 0.25% in February, or roughly half the size of last month's advance. Gasoline prices rose less than usual in last month, signaling a decline in energy goods prices on a seasonally-adjusted basis. That should help keep the overall contribution from energy slightly negative despite a pickup in energy services costs from the recent strength in natural gas prices.

Download the Full Report!