US Inflation Set to Stay Sticky as Tariff Risk Looms

(Bloomberg) — US consumer prices probably rose in February at a pace that illustrates plodding progress on inflation for Federal Reserve officials. They may be content to remain on the sidelines to assess a policy whirlwind from the Trump administration.

Most Read from Bloomberg

Bureau of Labor Statistics figures on Wednesday are projected to show that the consumer price index minus food and energy climbed 0.3%, based on the median estimate of economists surveyed by Bloomberg. While less than January’s 0.4% gain in January, the magnitude of the increase leaves annual price growth elevated.

The so-called core CPI probably rose 3.2% from February last year. The data will inform the Fed’s preferred price gauge, which isn’t due until after the March 18-19 policy meeting. Interest-rate setters — now in a blackout period ahead of that gathering — have an inflation goal of 2%.

The latest snapshot of price pressures follows a February jobs report that showed steady payrolls growth tempered by hints of underlying cracks in the labor market. The broader economy is also displaying signs of softening, reflecting weaker consumer spending, sentiment and homebuilding at the start of the year.

Wednesday also is the day that 25% tariffs for steel and aluminum imports are scheduled to take effect, with US Commerce Secretary Howard Lutnick signaling on Sunday that he doesn’t expect a reprieve from the levies.

On Thursday, data are projected to show similar lingering cost pressures at the economy’s wholesale level. The producer price index, excluding food and fuel, is projected to have risen by 3.5% in February from a year ago.

What Bloomberg Economics Says:

“Chair Jerome Powell has said the Fed needs to see ‘real progress’ on inflation or some labor-market weakness to consider adjusting rates again. After early-year price resets stalled disinflation in January, policymakers will be looking for new progress in February’s CPI. We expect only modest improvement as residual seasonality effects linger: We estimate both headline and core CPI inflation rose 0.3%.”

—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou & Chris G. Collins, economists. For full analysis, click here

On Friday, a University of Michigan report is projected to show a further decline in consumer sentiment. Traders, as well as Fed officials, will pay particular attention to the survey’s inflation expectations metrics.

The Bank of Canada is widely expected to cut rates by a further 25 basis points on Wednesday if President Donald Trump’s sweeping tariff push on Canadian goods persists. Previously, many economists had counted on a pause after recent data showed the economy bounced back strongly in the fourth quarter.

It’s a challenging moment for Governor Tiff Macklem, who successfully wrestled inflation lower and put the country on track for a soft landing — only to face potential stagflation from a trade war instigated by an ally.

Elsewhere, inflation releases from China to Russia, growth data in the UK and a key speech by the European Central Bank president are among highlights.

Click here for what happened last week, and below is our wrap of what’s coming up in the global economy.

Asia

The week kicked off with China’s inflation report, which revealed a drop below zero for the first time in 13 months. While reading was skewed by seasonal distortions, it’s also a reminder of persistent deflationary pressures in the economy.

On Monday, investors will focus on Japan’s labor cost data after nominal wages in December rose at the fastest pace in nearly three decades. Japan will also release current account figures on the day amid increasingly uncertain prospects for global flow of investment and trade.

The country’s current-account surplus hit a record high in 2024, with the yen’s weakness inflating the value of overseas investment returns. A renewed trade war between the US and China, Japan’s two biggest trading partners, hangs heavy over the outlook.

Also on Monday, the State Bank of Pakistan is expected to cut rates to 11.5% to support growth after inflation eased to the lowest in seven years.

On Tuesday, Japan will publish final gross domestic product estimates for the fourth quarter. A strong report may pave the way for further monetary policy tightening.

Australia releases a private survey for businesses which is likely to show the impact on sentiment of the country’s first rate cut in four years. Australia and Indonesia also report consumer confidence data.

On Wednesday, South Korea’s unemployment rate will be closely watched after a steeper-than-expected drop in January.

India’s consumer price growth likely cooled slightly in February which could spur bets for further monetary policy easing. Japan releases fourth-quarter economic and business conditions as well as producer prices, while New Zealand has card spending data. Malaysia and India report industrial output.

Friday will see trade data from South Korea and New Zealand’s food prices.

Also during the week, China publishes credit data as well as foreign direct investment figures which will be closed watched after the country in January recorded the weakest start for inbound investment in four years.

Europe, Middle East, Africa

A packed week of policymaker appearances is in store for the euro zone following the ECB decision on Thursday to cut rates and avoid giving a clear signal of its next move.

Officials on the schedule include President Christine Lagarde, who’ll make a key speech to a major conference in Frankfurt on euro-zone monetary policy. Chief economist Philip Lane and governors from the region’s four largest economies are on the calendar too.

Among data in the region, euro-zone industrial production on Thursday will give a signal on growth at the start of the year.

Prior to those figures, numbers from Germany will reveal how the country’s sickly manufacturing businesses were faring before Friedrich Merz won the Feb. 23 election. He’s working on a fiscal package that could prove a massive support to the country’s crippled industrial backbone.

Merz’s plan also includes almost unlimited defense spending, an idea also gaining traction elsewhere in Europe. Polls published over the weekend show that the Trump administration’s policy shifts toward Europe and Ukraine are boosting support for increased military outlays in France and the UK.

In Britain, GDP data for January, due on Friday, are predicted to show a third monthly increase, albeit much slower than the spurt seen at the end of last year.

Meanwhile, a senior cabinet minister said on Sunday that the UK will slash the number of civil servants and use artificial intelligence to boost efficiency in the government.

Sweden will release its monthly GDP indicator on Monday, and Riksbank officials will testify to lawmakers the following day.

Norway and Denmark will publish inflation numbers during the week, as will Poland. The Polish central bank is likely to keep borrowing costs steady at a decision on Wednesday. The National Bank of Serbia, meanwhile, may extend its pause in monetary easing for a sixth month.

Turning south, Egypt’s inflation is expected to show a sharp drop in February from 24% a month earlier, paving the way for several rate cuts this year.

Ghana’s finance minister, Cassiel Ato Forson, will present the Mahama administration’s first budget on Tuesday, outlining plans to revive the ailing economy. He may also provide details on International Monetary Fund talks to alter the terms of a $3 billion program that ends next year.

In South Africa, Finance Minister Enoch Godongwana will present his own budget in Cape Town on Wednesday, a month after delaying plans because of a coalition disagreement over a proposal to raise taxes. Investors will watch for how far he sticks with fiscal consolidation while holding few options to raise revenue and reduce spending.

Russia will publish inflation figures for February on Wednesday, just over a week before its next rate decision. Bloomberg Economics sees annual price growth reaching 10% before trending lower through the rest of the year.

In Israel, meanwhile, inflation is expected to have eased slightly to 3.7% from 3.8% a month earlier. That report is due on Friday.

Latin America

Much watched central bank surveys of economists are on tap in Argentina, where inflation expectations are drifting ever lower, and in Brazil, where they’ve leveled off after a protracted run-up.

Brazil’s February inflation report will likely show a roughly 60 basis-point jump in the year-on-year print to well over 5%, the highest since September 2023.

Brazil also reports industrial production, retail sales, budget and lending data in the coming week.

While tighter financial conditions — Brazil’s central bank has tipped a third-straight 100 basis-point rate hike at its March 19 meeting — have yet to bring inflation and expectations to heel, retail sales and industry finished off 2024 on the defensive.

In Peru, the central bank is likely quite close to drawing a line under its post-pandemic easing cycle.

Inflation in February slowed to 1.48%, below the 2% mid-point off the central bank’s 1%-to-3% target range, although policymakers led by President Julio Velarde may still opt to hold at 4.75%.

Industrial production, wage data, consumer confidence and same-store sales are on tap in Mexico.

Argentina’s national inflation all but certainly slowed for 10th month, possibly sinking below 70% — down from 289.4% last April. The monthly reading may cool from January’s 2.2% print and local analysts see further disinflation ahead: they forecast 23.2% for year-end 2025 and 9.4% by 2027.

–With assistance from Laura Dhillon Kane, Mark Evans, Monique Vanek, Piotr Skolimowski, Robert Jameson, Swati Pandey, Beril Akman and Greg Sullivan.

(Updates with tariff plans in fifth paragraph)

Most Read from Bloomberg Businessweek

©2025 Bloomberg L.P.