The consumer price index rose by 3.2% compared to the previous year, according to the latest report published in February 2025. This figure remained unchanged from January 2025 but marked a significant point for economic observers. The CPI also saw a month-over-month increase of 0.9% in February 2025.
Notably, the annual inflation rate reflected the contributions from several driving factors. Housing and utilities accounted for a significant 4.4%, contributing 1.0% to the overall increase, while food and non-alcoholic beverages contributed 2.8% and played a role of 0.5% in the annual inflation rate. These figures highlight the persistence of inflationary pressures within the economy.
In February 2025, the annual inflation rate for goods increased slightly to 2.5%, up from 2.4% in January 2025, while the inflation rate for services decreased to 3.8%, down from 4.0% in January 2025. These fluctuations in the inflation rates for goods and services indicate variability in consumer demand and pricing strategies within various sectors of the economy.
The Monetary Policy Committee (MPC) has highlighted the importance of monitoring inflation expectations, particularly average expectations for the next two years, which have risen to 4.7% in the first quarter of 2025 from 4.6% in the previous quarter. The MPC aims to keep these expectations at the midpoint of its 3% to 6% target range, a balancing act amidst growing economic challenges.
As the MPC prepares for its upcoming meeting on March 20, 2025, the reading of the latest CPI report could impact decisions regarding the key interest rate, currently pegged at 7.5%. The central bank has already enacted three quarter-point cuts in prior meetings, and the current reading will likely influence its next steps.
In a climate shaped by external factors, US President Donald Trump's recent rhetoric and tariff measures against various countries continue to escalate. This ongoing tariff war and the impasse in the national budget have created uncertainty that complicates the MPC's decision-making process. Economists polled by Reuters have indicated that these risks might lead the reserve bank to pause its rate-cutting cycle as it assesses the broader economic climate.
Overall, the economic indicators reflect a period of measured responses from the MPC as it navigates the interplay between domestic inflationary pressures and international economic dynamics. As the committee nears its decision, stakeholders across various sectors are keenly awaiting the implications.