## FAQ

### What contributed to the decrease in inflation in February?

The decreases in airfares and gasoline partially offsetting shelter increases were major contributors to the decrease in inflation in February.

### How did the housing market impact inflation in February?

Housing drove nearly half of February’s inflation increase and remained higher than the 2019 pre-pandemic average of 3.4%. However, signs of cooling were observed, with the year-over-year change in the shelter index remaining below 5% for a sixth straight month.

### What are the implications of the election result on inflation?

The election result has put inflation back in the spotlight and added additional upside and downside risks to the economic outlook. Proposed tax cuts and tariffs could increase inflationary pressures, suggesting a more gradual easing cycle with a slightly higher terminal federal funds rate.

## Conclusion

Inflation slowed to a 3-month low in February, driven by decreases in airfares and gasoline. However, the report does not capture upcoming tariff impacts which could weigh on the economy and complicate the Fed’s path to its 2% target. The housing market, which drove nearly half of February’s inflation increase, shows signs of cooling but remains higher than the pre-pandemic average. Addressing rising housing costs requires additional supply, which is hindered by tight monetary policy. The election result has added both upside and downside risks to the economic outlook, with potential implications for inflation and the housing market.