Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Donald Trump’s trade war.

The consumer price index was up 2.8% from a year earlier, after rising another 0.2% on a monthly basis. That was a step down from January’s surprisingly large 0.5% increase and came in below economists’ expectations.

The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2% from the previous month, or 3.1% from a year earlier. Both percentages were below January’s increases.

The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2% goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply, but costs for other categories like gasoline fell. A 4% drop in airfares in February was a primary driver of the better-than-expected data.

Egg prices rose another 10.4% in February, as an outbreak of bird flu continued to exacerbate a nationwide egg shortage. Prices for eggs are up nearly 60% since last year. Food prices more broadly rose 0.2%, or 2.8% from a year earlier.

The cost of used cars also rose 0.9% in February, although new vehicle prices declined slightly. Car insurance, which was a huge driver of the index’s unexpectedly large increase in January, rose again, but at a much slower pace of 0.3%. It is up just over 11% over the past year.

Housing-related costs also notched the smallest 12-month gain since December 2021, with the shelter index up 4.2%. From January to February, it rose 0.3%.

The big question mark is when Trump’s tariffs will start to affect consumer prices in a more noticeable way. On Wednesday, Trump hailed February’s data, saying it was “very good news.”

“In a very short period of time we’ve done very well,” he said.

The only tariffs in place during the period covered by the February data were the initial 10% levies Trump imposed on Chinese imports. Ryan Sweet, chief U.S. economist at Oxford Economics, said there was not a “discernible impact on the CPI in February, including for apparel, furniture and electronic prices.” Rather, he expects the levies on China, which were doubled this month, along with the other tariffs Trump is now putting in place, to start to lift consumer prices over the next few months.

Peter Tchir, head of macro strategy at Academy Securities, said the biggest effect would likely show up in the months ahead if Trump follows through with reciprocal tariffs on trading partners. The president has threatened to lift U.S. tariffs to match what other countries charge on imports, which could raise the cost of products that Americans buy from overseas.

Beyond possible price increases, Tchir said he was very concerned about the outlook for the economy as a result of tariffs and the administration’s plans to slash government spending.

“The growth scare is real,” he said.

Uncertainty about the trajectory of the president’s policies has also amplified fears that businesses will begin to freeze hiring and investment in a more significant way as they await clarity on the scope and scale of Trump’s plans.

Those concerns have also materialized in recent measures tracking how consumers feel about the future. According to the latest survey from the Federal Reserve Bank of New York, consumers’ expectations about their financial situation in the year ahead “deteriorated considerably,” as they braced for inflation sticking to around 3.1%. The share of consumers now expecting to be in a worse situation financially a year from now rose to its highest point since November 2023. The average perceived likelihood of missing a future debt payment rose to the highest level since April 2020.

A combination of slowing growth and resurgent price pressures puts the Fed in a difficult position, given its mandate to pursue low, stable inflation as well as a healthy labor market.