USA CPI Report: February 2026 — Inflation Holds at 2.4% (Calm Before the Storm)
The Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) report for February 2026 on March 11. Headline inflation held steady at 2.4%, matching expectations — but economists warn this is the last "clean" reading before the Iran war oil shock hits the data.
Headline Overview
| Indicator | Jan 2026 | Feb 2026 | Change |
|---|
| Headline CPI (YoY) | 2.4% | 2.4% | 0.0pp |
| Core CPI (excl. Food & Energy, YoY) | 2.5% | 2.5% | 0.0pp |
| CPI Index Level | 325.252 | 326.785 | +1.533 |
| MoM Change (SA) | +0.2% | +0.3% | +0.1 |
| Core MoM (SA) | +0.3% | +0.2% | -0.1 |
Key takeaway: Both headline and core CPI came in exactly in line with Wall Street estimates. The numbers look stable on the surface, but this report pre-dates the Iran war (U.S.-Israel attacks began late February). Moody's estimates the "true" rate, adjusting for the government shutdown data gap, is closer to 2.7%. Economists expect a significant upward move in March as surging oil prices feed through.
⚠️ Data caveat (still active): The fall 2025 government shutdown disrupted BLS data collection. Missing October data continues to impart a downward bias through approximately April 2026.
Key Sector Inflation (Year-on-Year)
| Sector | Jan 2026 | Feb 2026 | Change (pp) |
|---|
| Food (overall) | 2.9% | 3.1% | +0.2 🔴 |
| — Food at Home | 2.1% | — | — |
| — Food Away from Home | 4.0% | — | — |
| Shelter | 3.0% | 3.0% | 0.0 |
| Energy (overall) | -0.1% | +0.5% | +0.6 🔴 |
| Core (excl. Food & Energy) | 2.5% | 2.5% | 0.0 |
| Medical Care Services | +3.2% | +4.1% | +0.9 🔴 |
| Airline Fares | +2.2% | +7.1% | +4.9 🔴 |
| Motor Vehicle Maintenance & Repair | +4.9% | +5.6% | +0.7 🔴 |
| Personal Care | +5.4% | +4.9% | -0.5 ⬇️ |
| Tenants' & Household Insurance | +6.9% | +6.2% | -0.7 ⬇️ |
| Auto Insurance | — | +0.2% | — |
⬇️ Rent rose just 0.1% month-on-month — the smallest monthly increase since January 2021. This is a significant milestone in the shelter disinflation story.
🔴 Airline fares surged 1.4% for the month, putting the annual rate at 7.1%. This is likely a precursor to further increases as jet fuel costs rise.
🔴 Apparel jumped 1.3% month-on-month — the biggest monthly increase since September 2018 — reflecting tariff pass-through on imported clothing.
Monthly Highlights (February 2026 MoM, Seasonally Adjusted)
| Category | MoM Change |
|---|
| All Items | +0.3% |
| Core (excl. Food & Energy) | +0.2% |
| Shelter | +0.2% |
| — Rent | +0.1% (lowest since Jan 2021) |
| Food | +0.4% |
| Energy | +0.6% |
| Apparel | +1.3% |
| Airline Fares | +1.4% |
| Medical Care Services | +0.6% |
| Eggs | -3.8% (down 42.1% YoY) |
| Used Cars & Trucks | — |
| Auto Insurance | -0.3% |
The Iran War Factor
This report covers data collected before the U.S.-Israel attacks on Iran in late February. The inflationary impact of surging oil prices is not yet reflected in this data and will begin showing up in March.
| Metric | Current |
|---|
| Average gasoline price | ~$3.50/gallon (as of mid-March) |
| Increase since late Feb | +$0.57/gallon (+19%) |
| Crude oil outlook (prolonged conflict) | ~$100/barrel avg for 2026 |
| CPI forecast if oil stays elevated | Could reach 3.5% by year-end |
Economists warn of second-order effects: rising jet fuel → higher airfares, more expensive diesel → higher food transport costs → elevated grocery prices. The spring and summer travel season could amplify these pressures.
Items Still Elevated
| Item | YoY | Notes |
|---|
| Ground Beef | ~+15% | Supply constraints |
| Coffee | ~+18% | Extreme weather in Vietnam/Brazil |
| Electricity | +6.3% | Persistent |
| Household Insurance | +6.2% | Climate risk repricing |
| Motor Vehicle Repair | +5.6% | Labor + parts costs |
Fed Policy Outlook
| Indicator | Current |
|---|
| Fed Funds Rate | 4.25–4.50% |
| Next decision | March 18 (expected hold) |
| Next expected cut | September 2026 (market pricing) |
| Chance of 2nd cut by year-end | ~43% |
The Fed is widely expected to hold rates at its March 18 meeting. The February CPI data alone wouldn't change the calculus, but the Iran oil shock dramatically complicates the outlook. The Fed now faces a potential tension between rising energy inflation and a weakening labor market (only ~15,000 jobs/month added in 2025).
Context
February's report was released on a Wednesday (March 11) — back on the normal schedule after delays from the government shutdown.
Tariff effects are showing up in select goods (apparel +1.3% MoM) but haven't broadly spiked inflation as many feared.
Eggs continue their dramatic reversal: down 42.1% YoY after the avian flu-driven surge.
The March CPI (released April 10) will be the first to capture the full Iran war oil impact.
Source: U.S. Bureau of Labor Statistics, Consumer Price Index — February 2026 (released March 11, 2026)
