Current Inflation Data – Costs on the Rise (But Slowing) 

Inflation has been a hot topic over the past couple of years, and we want to update you on where things stand now. The latest data show that inflation is still present but has been gradually cooling off. In February, the annual inflation rate in the U.S. was 2.8%, which is a slight dip from January’s 3.0% rate.¹ To put this in perspective, inflation has come down a lot from its peak of just over 9% back in 2022.² That’s good news – it means the pace of price increases has slowed dramatically from the rapid spikes we experienced a couple of years ago.

What does a 2.8% inflation rate feel like in everyday life? It means that overall, a broad basket of goods and services is about 2.8% more expensive than a year ago. Some costs are rising faster, and some slower. For example, grocery shoppers might have noticed higher prices on certain items – egg prices in February were up a whopping 10% from the prior month, largely due to an avian flu outbreak causing an egg shortage.³ On the other hand, energy prices (think gasoline, electricity) have stabilized recently; energy rose only 0.2% in February, much less of an increase than we saw in January.⁴ In short, we’re still feeling inflation at the supermarket and gas pump, but not as intensely as last year.

How are markets and policymakers reacting? Generally, markets have been relieved to see inflation come down, because high inflation last year led the Federal Reserve to raise interest rates aggressively. With inflation now closer to the Fed’s 2% target (though not at the target yet)  , there’s hope that interest rates won’t need to rise further and might even come down eventually. In fact, the Fed has already slowed down its rate hikes and even enacted a few small rate cuts late last year as inflation pressures eased . That said, the Fed is still keeping a close eye on prices. At 2.8%, inflation is better but not “mission accomplished” – it’s slightly above the comfort zone. If inflation were to pick back up (for instance, if tariffs or other factors make goods more expensive), the Fed could reconsider cutting rates. For now, though, the trend is encouraging: price increases are moderating, and consumers are getting a bit of relief.

Implications for your long-term plan: We always factor inflation into our financial planning assumptions. Even modest inflation can erode purchasing power over time – for example, at ~3% inflation, the cost of living would roughly double in about 25 years. That’s why it’s important that your investments outpace inflation over the long haul. The good news is that historically, a well-balanced portfolio (with stocks, for instance) has exceeded inflation, helping grow real wealth. We also look at inflation when planning retirement income strategies, Social Security adjustments, and cost-of-living increases in your budget. The current inflation data suggests we’re moving in the right direction, but we remain vigilant. If you’re worried about how rising prices might affect things like your monthly expenses or the longevity of your savings, let’s discuss it. We can review your plan’s inflation assumptions and ensure you’re comfortable with them. Bottom line: inflation is part of the economic landscape, and we plan for it to help maintain your standard of living both now and in the future.

1. https://www.theguardian.com/business/2025/mar/12/februrary-inflation-rate#:~:text=According%20to%20the%20Bureau%20of,compared%20with%20January%E2%80%99s%200.4 ↩︎
2. https://www.theguardian.com/business/2025/mar/12/februrary-inflation-rate#:~:text=While%20inflation%20has%20declined%20sharply,4 ↩︎
3. https://www.theguardian.com/business/2025/mar/12/februrary-inflation-rate#:~:text=The%20egg%20shortage%20caused%20by,in%20January ↩︎
4. https://www.theguardian.com/business/2025/mar/12/februrary-inflation-rate#:~:text=The%20egg%20shortage%20caused%20by,in%20January ↩︎