Recent inflation data has provided a boost to US equity markets, with February's Consumer Price Index (CPI) rising 2.8% year over year, lower than January’s 3%. This decline is attributed in part to easing housing costs, which historically are a stubborn component of inflation. However, concerns remain regarding the impact of new tariffs on goods such as steel and aluminum, which are expected to raise costs for consumers. Despite a positive CPI reading, fears of escalating tariffs persist as retaliatory measures from Canada and the EU have been announced. Secretary of Commerce Howard Lutnick emphasized that tariffs are necessary, even if they lead the economy towards recession. As companies face decisions on whether to absorb costs or raise prices, the potential for inflation to increase remains. While the Federal Reserve appears unconcerned with the current economic situation, vigilance surrounding tariffs continues to overshadow the positive inflation news.

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