The US Bureau of Labor Statistics released US inflation data for February yesterday. The report showed measures of annual inflation were unchanged in February compared to January. Price relief was welcomed by US consumers, who are now facing higher energy prices in response to tensions in the Middle East. With oil prices moving sharply higher amid the war in Iran, the International Energy Agency (IEA) and its member countries agreed to release oil from their emergency reserves, which could help address the growing supply challenges.

• The US inflation rate was 2.4% year-over-year in February, which was unchanged from January. While inflation has fallen since September 2025 when it reached 3.0%, it remains above the US Federal Reserve Board’s (Fed) 2% target.
• Energy prices increased by 0.5% year-over-year in February, reversing from a 0.1% year-over-year decline in January. The growth in food and shelter prices was unchanged, while the prices for used vehicles declined.
• The annual core inflation rate, which excludes more volatile items, remained at a multi-year low of 2.5% in February.
• Inflation could pick up given the tensions in the Middle East, which have pushed up energy prices. The Strait of Hormuz has been effectively closed, cutting off shipments of oil to elsewhere around the world.
• The IEA has agreed to release 400 million barrels of oil from its emergency reserves. Canada, which does not hold strategic reserves, said it will “do its part” to help the IEA.

There are plenty of upside risks to inflation in the US and other countries around the world. The Fed is expected to hold its federal funds rate steady on March 18, largely in response to concerns that inflation may move higher. The release of oil by the IEA could ease supply concerns and potentially stabilize the price of oil, which has risen by over 25% since the start of the conflict.

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