(NewsNation) — Inflation slowed in President Donald Trump’s first full month in office, new Labor Department data shows. The consumer price index increased 2.8% in February from a year ago, but ticked up 0.2% from January.
Core prices, which exclude the volatile food and energy categories, rose 3.1% from a year earlier, down from 3.3% in January. The core figure is the lowest since April 2021.
The monthly inflation rose by much less than expected. The 0.2% jump in February from the previous month is down from a 0.5% jump in January. And core prices increased just 0.2%, below the 0.4% rise in January. Economists watch core prices because they are typically a better guide to the future path of inflation.
Grocery prices were unchanged last month from January, bringing some relief to consumers grappling with a 25% jump in grocery prices from four years ago. The cost of eggs, however, jumped 10.4% in February from the previous month and are nearly 60% more expensive than a year ago.
The increases were less than the 2.9% rise economists expected, according to a survey by data provider FactSet, though they remain higher than the Federal Reserve’s 2% target.
Two policies under the Trump administration are expected to have a significant impact on the U.S. economy going forward: Trump’s tariffs placed on a wide range of foreign imports and cuts to federal government spending under the Department of Government Efficiency.
EU retaliates against Trump’s tariffs
On Wednesday, the European Union announced retaliatory tariffs on U.S. industrial and farm products, responding within hours to the Trump administration’s increase in tariffs on all steel and aluminum imports to 25%.
European Commission President Ursula von der Leyen said that as the U.S. is “applying tariffs worth 28 billion dollars, we are responding with countermeasures worth 26 billion euros,” or about $28 billion.
“We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs,” she said. “Jobs are at stake. Prices will go up, in Europe and in the United States.”
The commission manages trade and commercial conflicts on behalf of the 27 member countries. Von der Leyen said the EU “will always remain open to negotiation.” Britain, which is not part of the EU, has said it will not impose retaliatory measures of its own on the U.S.
Trump slapped similar tariffs on EU steel and aluminum during his first term in office, which enraged European and other allies. The EU also imposed countermeasures in retaliation at the time, raising tariffs on U.S.-made motorcycles, bourbon, peanut butter and jeans, among other items.
This time, the EU action will involve two steps. First, on April 1, the commission will reintroduce what it calls “rebalancing measures,” which the EU had in place from 2018 to 2020 but were suspended under the Biden administration. Then, on April 13, additional tariffs will target 18 billion euros ($19.6 billion) in U.S. exports.
Trump sticks to his guns on economy
With Trump imposing or threatening tariffs on imports from Canada, Mexico, China, Europe and India, most economists forecast price increases will likely remain elevated this year.
Trump on Tuesday reiterated his commitment to his economic approach, regardless of short-term fluctuations.
“We’re going to have drops, and markets are going to go up, and they’re going to go down,” he told reporters. “But you know what? We have to rebuild our country. Our country has been stripped of its jobs, of its factories.”
If price increases remain stubbornly high, that could create political problems for Trump, who promised as a candidate to “knock the hell out of inflation.”
White House brushes off recession worries
Trump’s tariffs have set off a wave of economic uncertainty, driving stocks lower and fueling fears of a potential recession.
Trump did not rule out the possibility of a recession in a recent Fox News interview with Maria Bartiromo.
When asked if he was expecting a recession this year, Trump told Bartiromo, “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.”
Secretary of Commerce Howard Lutnick has continued to dismiss concerns about a recession.
When asked if the administration’s policies would be worth it if they led to a recession, even a short-term one, Lutnick replied, “These policies are the most important thing America has ever had.”
When pressed, he confirmed, “It is worth it.”
Trump’s economic agenda roils markets
Markets are set to open after another day of red across the board on Wall Street — the Dow, Nasdaq and S&P 500 were all down Tuesday.
The S&P 500 is down more than 7% over the past month, wiping out all of its gains since Trump was reelected in November. Share prices for popular stocks like Tesla (-36%), Nvidia (-25%) and Meta (-16%) sank even faster from a month ago.
Uncertainty around Trump’s tariffs and the potential hit to both consumers and businesses appear to be the main reason investors are spooked.
Major retailers like Target and Best Buy have already warned shoppers Trump’s tariffs will likely lead to higher prices. Trump’s flip-flop in recent days has made it harder for Wall Street investors to price in the potential impact of tariffs.
Though it has fallen over the past month, the S&P 500 is up roughly 10% from a year ago.
NewsNation’s Andrew Dorn and The Associated Press contributed to this report.
