Core inflation was 3% in February, as expected, key Fed gauge shows

Finance

Core inflation was 3% in February, as expected, key Fed gauge shows

A customer shops for beef at a grocery store on April 6, 2026 in Los Angeles, California.

Justin Sullivan | Getty Images

Core inflation eased slightly in February before the recent surge in energy prices, according to a key gauge released Thursday that offers the Federal Reserve a snapshot of conditions leading into the Iran war.

The core personal consumption expenditures price index, which excludes food and energy, rose a seasonally adjusted 3% in February, the Commerce Department reported. The all-items headline inflation measure increased 2.8%.

Both readings were in line with the Dow Jones consensus. The core annual inflation rate was 0.1 percentage point lower than in January while headline was unchanged.

On a monthly basis, both core and headline prices rose 0.4%, also meeting forecasts.

The Fed uses the PCE price index as its primary yardstick and forecasting tool for inflation. The Fed, which targets 2% inflation, sees core as a better indicator of longer-term trends.