Inflation Held Steady Before Iran Conflict Lifted Gas Prices

Inflation held steady in February, according to the latest monthly inflation report from the U.S. Bureau of Labor Statistics (BLS), though the data predates the conflict in Iran that has since pushed energy prices higher.

The consumer price index (CPI) increased 0.3% on a seasonally adjusted basis in February and rose 2.4% year-over-year, the BLS reported March 11. That’s the same annual inflation as reported in January.

Shelter costs rose 0.2% in February and were the largest factor in the all items monthly increase, the BLS reported. The food index climbed 0.4% over the month, including a 0.4% rise in the food at home index and a 0.3% rise in the food away from home index. The index for energy also increased in February, rising 0.6%.

Core inflation, which excludes volatile food and energy prices, rose 0.2% in February and 2.5% annually, unchanged from January.

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The report is a helpful gauge to see where inflation was last month, but economists warn the figures may not accurately reflect consumer prices due to recent events. Gas prices, for instance, have risen sharply since the beginning of the Iran conflict. The average price per gallon of unleaded gas in the U.S. is at about $3.57 per gallon as of March 11, according to AAA. And the recent jobs report showed a dramatic drop, sparking concerns of a struggling labor market.

Even though inflation has eased in recent months, elevated prices remain a challenge for employers and employees, driving up operating costs, increasing financial strain, and putting pressure on wages.

As the cost of living remains high, many workers are skeptical that their pay will keep pace. Nearly half of working Americans (49%) say they do not believe their wages will ever catch up with the rising cost of living, with another 32% saying their wages won’t catch up for many years, according to a 2026 financial outlook from San Francisco-based career platform Resume Now.

“Workers are telling us something critical: They’re not just stretched thin; they’re losing hope,” said Keith Spencer, career expert at Resume Now. About 7 in 10 workers (69%) feel underpaid, with just 2% believing they are overpaid, according to Resume Now. 

Meanwhile, more than one in four employers (26%) have decided they will not provide cost-of-living adjustments, according to SHRM’s February 2026 Current Events Pulse.

Despite lingering concerns about prices, wage growth slightly outpaced inflation in February.

Real average hourly earnings for all employees increased 0.2% from January to February, seasonally adjusted, the BLS reported separately March 11. This result stems from an increase of 0.4% in average hourly earnings combined with an increase of 0.3% in the CPI.