February Annual Inflation Holds Steady as Analysts Caution About Post-War Bump

10:57 AM EDT, 03/11/2026 (MT Newswires) -- Annual consumer inflation in the US held steady last month, though analysts cautioned that a spike in energy prices in the aftermath of the Middle East conflict poses upside risks to inflation.

The consumer price index grew 2.4% year-on-year, unchanged from January and meeting a Bloomberg-polled consensus, the Bureau of Labor Statistics reported Wednesday.

Prices rose 0.3% sequentially, up from a 0.2% increase in January. The print was in line with Wall Street's estimate.

"This morning's inflation report feels a bit backward looking following recent geopolitical developments," Thomas Feltmate, senior economist at TD Economics, said in a note. "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."

Core inflation, which excludes the volatile food and energy components, held steady at 2.5% annually, while the metric eased to 0.2% from 0.3% sequentially. Both prints were in line with market expectations.

Energy prices turned positive sequentially, while the index rose 0.5% year-on-year, official data showed.

Oil prices recently reached as high as $119.50 a barrel as the closure of the vital Strait of Hormuz drove Middle Eastern producers to cut output. The US and Israel launched airstrikes on Iran on Feb. 28.

Brent crude was last up 3.5% at $90.85 a barrel, while West Texas Intermediate was 3.2% higher at $86.15, still well above pre-war levels.

The International Energy Agency said on Wednesday that it would release 400 million barrels of oil to address supply disruptions triggered by the Iran war.

"The February consumer price index is unlikely to move the needle on the outlook for monetary policy, as it's only just a snapshot of prices immediately before the US/Israel-Iran war, which will lead to much stronger headline inflation in March," Oxford Economics Lead US Economist Bernard Yaros said in remarks emailed to MT Newswires ahead of the IEA decision.

Core inflation eased month-over-month as rents softened and core goods excluding used vehicles slowed, Yaros said. "The latter development should allay fears about further meaningful tariff passthrough, which we think has largely played out."

Monthly food price growth accelerated to 0.4% in February from 0.2% in January, while the measure advanced 3.1% annually, official data showed.

Markets widely expect the Federal Reserve to leave its benchmark lending rate unchanged next week, according to the CME FedWatch tool.

"An oil price shock represents a two-sided risk for the (Fed) dual mandate," Yaros said. "We feel more confident than before that the central bank will wait until June before cutting interest rates again."

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