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Inflation steady prior to Iran attack boosting costs

KANSAS CITY — Inflation remained stubbornly elevated last month as gas prices rose, but it’s a snapshot of consumer prices before a U.S.-Israeli attack on Iran sent energy costs soaring.

Consumer prices rose 2.4% in February compared with a year earlier, the Labor Department said Wednesday, matching January’s increase. Excluding the volatile food and energy, core prices climbed 2.5% from a year ago, also matching January’s level, which was the lowest in five years. Both remain above the Federal Reserve’s 2% target.

Wednesday’s data has been overtaken by a conflict that began when the U.S. and Israel attacked Iran on Feb. 28, causing wild gyrations in oil prices as shipping lanes through the Persian Gulf suffered a rare shutdown. Gas prices have jumped sharply and are expected to fuel higher costs broadly. Inflation data for this month will be released in early April.

The price spike will challenge the inflation-fighters at the Federal Reserve and could slow consumer spending, which drives two-thirds of the nation’s economic growth.

Prices could retreat if the war ends soon, as President Donald Trump has hinted. But rising oil prices threaten to worsen inflation for at least a few months with Americans already worn down by nearly five years of sharply higher costs. “Affordability” has become a thorny political issue for congressional Republicans with midterm elections later this year.

On a monthly basis, prices rose 0.3% in February from the previous month, up from 0.2% in January. Increases at that pace for an extended period would push yearly inflation higher. Core prices moved up just 0.2%, down from a 0.3% rise in January.

There were some positive signs in Wednesday’s report, with rental inflation falling to just 0.1% on a monthly basis, the smallest increase in five years. New car prices were unchanged in February and used car prices fell 0.4%.

But grocery prices rose more quickly than in January, a trend that has hammered family budgets. They rose 0.4% in February and were up 2.4% from a year earlier. Gas prices increased 0.8% last month, though they’re down 5.6% compared with a year ago. And clothing costs jumped 1.3% just in February, likely due to tariffs.

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