US inflation stayed flat at 2.4% in February before effects of war on Iran kicked in

• Gas prices were down 5.2% year-over-year in February but surged from under $3 to $3.50 per gallon by March 10 following the Iran conflict, with economists estimating every $10 oil price increase adds 0.2% to overall inflation
• February jobs data showed the US economy lost 92,000 jobs with unemployment rising to 4.4%, putting pressure on the Fed's dual mandate of controlling both inflation and unemployment
• Trump's tariffs have driven significant price increases in import-dependent sectors, while the Supreme Court struck down much of his tariff regime last month, prompting him to impose a new 15% across-the-board tariff under different legal authority

Market Summary: US Inflation Holds at 2.4% in February

Key Data Points

US inflation remained flat at 2.4% in February 2026, unchanged from January, according to government data released Wednesday. Core inflation (excluding energy and food) stood at 2.5%. The data represents a pre-war snapshot, captured before the US-Israel conflict with Iran intensified.

Sector-Specific Impact

Tariff-affected sectors showed significant price pressures:

• Coffee prices: up 18.4% year-over-year
• Canned fruits and vegetables: up 6.2%
• Furniture and bedding: up 4.2%

Energy sector: Gas prices were down 5.2% annually in February but subsequently surged from under $3/gallon to $3.50 by March 10 following the Iran conflict. Economists estimate each $10 oil barrel increase adds 0.2% to overall inflation.

Other increases: Shelter, medical care services, and utilities led price gains.

Policy and Market Implications

The Federal Reserve faces challenging dual pressures: inflation remains stubbornly above the 2% target while unemployment rose to 4.4% with 92,000 jobs lost in February. The consensus expects the Fed to hold rates steady at next week's meeting, despite President Trump's calls for cuts.

Trump's tariff policies continue reshaping trade, with the Supreme Court blocking much of his initial regime. He responded with a new 15% blanket import tariff under different legal authority.

Outlook

The Iran conflict introduces significant uncertainty. Trump dismissed oil price concerns as "a very small price to pay," though prolonged conflict could trigger broader inflationary pressures across the economy.