WASHINGTON — Consumer prices in the United States picked up last month, a sign that inflation remains a persistent challenge for the Federal Reserve and for President Joe Biden’s reelection campaign, both of which are counting on a steady easing of price pressures this year. 

Prices rose 0.4% from January to February, higher than the previous month’s figure of 0.3%, the Labor Department said Tuesday. Compared with a year earlier, consumer prices rose 3.2% last month, faster than January’s 3.1% annual pace. 

Excluding volatile food and energy prices, so-called “core” prices also climbed 0.4% from January to February, matching the previous month’s increase and a faster pace than is consistent with the Fed’s 2% target. Core inflation is watched especially closely because it typically provides a better read of where inflation is likely headed. 

Pricier gas pushed up overall inflation, with pump prices rising 3.8% just from January to February. Grocery prices, though, were unchanged last month and are up just 1% from a year earlier. The cost of clothing, used cars and rent also increased in February, raising the inflation figure. 

Despite February’s elevated figures, most economists expect inflation to continue slowly declining this year. At the same time, the uptick last month may underscore the Fed’s cautious approach toward interest rate cuts. 

Overall inflation has plummeted from a peak of 9.1% in June 2022, although it’s now easing more slowly than it did last spring and summer. The prices of some goods — from appliances to furniture to used cars — are falling after clogged supply chains during the pandemic sent prices soaring higher. There are more new cars on dealer lots and electronics on store shelves. 

By contrast, prices for dental care, car repairs and other services are still rising faster than they did before the pandemic. Car insurance has shot higher, reflecting rising costs for repairs and replacement. And after having sharply raised pay for nurses and other in-demand staff, hospitals are passing their higher wage costs on to patients in the form of higher prices. 

Voter perceptions of inflation are sure to occupy a central place in this year’s presidential election. Despite a healthy job market and a record-high stock market, polls show that many Americans blame Biden for the surge in consumer prices that began in 2021. Although inflationary pressures have significantly eased, average prices remain far above where they stood three years ago. 

In his State of the Union speech last week, Biden highlighted steps he has taken to reduce costs, like capping the price of insulin for Medicare patients. The president also criticized many large companies for engaging in “price gouging” and so-called “shrinkflation,” in which a company shrinks the amount of product inside a package rather than raising the price. 

“Too many corporations raise prices to pad their profits, charging more and more for less and less,” Biden said. 

Fed Chair Jerome Powell signaled in congressional testimony last week that the central bank is getting closer to cutting rates. After meeting in January, Fed officials said in a statement that they needed “greater confidence” that inflation was steadily falling to their 2% target level. Since then, several of the Fed’s policymakers have said they believe prices will keep declining. One reason, they suggested, is that consumers are increasingly pushing back against higher prices by seeking out cheaper alternatives. 

Most economists expect the Fed’s first rate cut to occur in June, although May is also possible. When the Fed cuts its benchmark rate, over time it reduces borrowing costs for mortgages, car loans, credit cards and business loans. 

One factor that could keep inflation elevated is the still-healthy economy. Although most economists had expected a recession to occur last year, hiring and growth were strong and remain healthy. The economy expanded 2.5% last year and could grow at about the same pace in the first three months of this year, according to the Federal Reserve’s Atlanta branch. 

Last week, the Labor Department said employers added a robust 275,000 jobs in February, the latest in a streak of solid hiring gains, and the unemployment rate stayed below 4% for the 25th straight month. That is the longest such streak since the 1960s. 

Still, the unemployment rate rose from 3.7% to 3.9%, and wage growth slowed. Both trends could make the Fed feel more confident that the economy is cooling, which could help keep inflation falling and lead the central bank to begin cutting rates. 
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WASHINGTON — The frozen military conflict between Ukraine and Russia is starting to thaw and will likely tilt in Moscow’s favor if the United States fails to quickly come through with additional military aid, according to top U.S. intelligence officials, in a grim assessment delivered to U.S. lawmakers.

Monday’s warning comes nearly a month after the U.S. Senate voted in favor of a stand-alone foreign aid bill that would send $60 billion in aid to Ukraine as it tries to hold on to territorial gains more than two years after Russian forces invaded.

But the lawmakers in the House of Representatives have refused to bring the bill up for a vote, leaving other Western nations scrambling to provide Ukraine with enough weapons and ammunition to hold off a renewed Russian offensive.

The $60 billion “is absolutely critical to Ukraine’s defense right now,” Director of National Intelligence Avril Haines told members of the Senate Intelligence Committee.

“Ukraine’s retreat from Avdiivka and their struggle to stave off further territorial losses in the past few weeks have exposed the erosion of Ukraine’s military capabilities with the declining availability of external military aid,” she said. “Without that assistance, it is hard to imagine how Ukraine will be able to maintain the extremely hard-fought advances it has made against the Russians.”

The director of the Central Intelligence Agency told lawmakers the war is at a crossroads, and that what happens next likely hinges on the provision of U.S. aid.

“The Ukrainians are not running out of courage and tenacity. They’re running out of ammunition,” said the CIA’s William Burns. “And we’re running out of time to help them.”

Both Haines and Burns reiterated previous assessments: that up until now, Ukraine’s military has inflicted serious damage on Russia’s forces.

U.S. officials believe at least 315,000 Russian troops have been killed or wounded, and that two-thirds of Russia’s prewar tank inventory has been destroyed. The Russian military, which had been undergoing a modernization program, has been set back years.

Russia’s invasion has also served to galvanize the West, with Sweden and Finland joining the NATO military alliance.

But Haines and Burns told lawmakers that none of those strategic defeats have managed to change the calculus of Russian President Vladimir Putin.

“Putin continues to judge that time is on his side,” Haines said, cautioning that the Russian leader is as entrenched as ever.

“He continues to see NATO enlargement and Western support for Ukraine as reinforcing his long-held belief that the United States and Europe seek to restrict Russian power and undermine him,” she said, telling lawmakers that Putin’s response has been to push ahead with efforts to grow the Russian military, pouring more money into ammunition production and into the purchase of military supplies from Iran and North Korea.

U.S. intelligence officials also see signs Putin is continuing to move forward with plans to modernize and fortify Russia’s nuclear weapons arsenal, already thought to be the largest and most diverse in the world.

And there are signs that Russia is willing to take chances to gain an advantage.

“We remain concerned that Moscow will put at risk long-standing global norms against the use of asymmetric or strategically destabilizing weapons, including in space and in the cyber domain,” Haines said.

Some lawmakers echoed the concerns, urging colleagues to pass the legislation to get Ukraine the military supplies it needs.

“My fear is the decision thus far by the House of Representatives not to even take up legislation that would support Ukraine in the fight against Putin aggression has been one of the most short-sighted decisions on a national security issue that I can possibly imagine,” said Senate Intelligence Committee Chairman Mark Warner, a Democrat.

“The impact and long-term consequences of us abandoning Ukraine … it’s a 50-year mistake that would haunt this country,” added independent Senator Angus King.

And U.S. intelligence officials warned of a cascading global impact if the additional aid for Ukraine fails to materialize.

“The consequence of that will not just be for Ukraine or for European security but across the Indo-Pacific,” said the CIA’s Burns. “If we’re seen to be walking away from Ukraine, not only is that going to feed doubts amongst our allies and partners in the Indo-Pacific, it’s going to stoke the ambitions of the Chinese leadership in contingencies ranging from Taiwan to the South China Sea.”

The intelligence officials said while China remains wary, for now, it has been emboldened by Russia.

In particular, the intelligence officials said Russia was forced to grant China some long-sought concessions in exchange for support for Moscow’s war against Ukraine.

Iran and North Korea have likewise benefited, they said, warning the impact remains to be seen.

The changing dynamics have “the potential to undermine, among other things, long-held nonproliferation norms,” Haines said.

But she added that while Russia, China, Iran and North Korea are growing closer, the prospects for a true alliance are, for now, remote.

“Parochial interests, a desire to avoid entanglements, and weariness of harm and instability from each other’s actions will likely limit their cooperation … absent direct conflict between one of these countries and the United States,” Haines said.

Israel – Gaza

The U.S. intelligence officials also addressed concerns about the ongoing conflict in Gaza, where Israeli forces continue to pursue fighters of the Hamas terror group despite warnings from the United Nations and aid groups about the devastating impact on civilians.

“We’re going to continue to work hard at this — I don’t think anybody can guarantee success,” the CIA’s Burns told lawmakers when asked about ongoing efforts to get a temporary cease-fire.

Burn recently traveled to the Middle East to meet with officials from Israel, Egypt and Qatar.

He said the deal currently under consideration would provide for the return of about 40 Israeli hostages still held by Hamas, most of them wounded or ill women or older men, in exchange for a six-week-long cease-fire that would allow the U.S. and its allies to surge in desperately needed aid.

“I understand Israel’s need, and the president [Joe Biden] has emphasized this, to respond to the brutish attack that Israelis suffered on the 7th of October [by Hamas],” Burns told Republican Senator Tom Cotton.

“But I think we all also have to be mindful of the, you know, enormous toll that this has taken on innocent civilians in Gaza,” he added.

Gaza fallout

Haines further warned lawmakers that the crisis in Gaza has “galvanized violence by a range of actors,” and that it “is likely that the Gaza conflict will have a generational impact on terrorism.”

But Haines said for now, Iran and its Lebanese proxy, Hezbollah, appear reluctant to try to push too hard to manipulate the fighting for their benefit.

“We continue to assess that Hezbollah and Iran do not want to cause an escalation of the conflict that pulls us or them into a full-out war,” she said.

Still, Haines acknowledged other Iranian-linked groups, like the Houthis in Yemen, have become “aggressive actors,” launching dozens of attacks on international shipping.

Katherine Gypson contributed to this report.
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MANILA, Philippines — The United States is constantly assessing the need to expand export controls to stop China from acquiring advanced computer chips and manufacturing equipment that could be used to boost its military, U.S. Commerce Secretary Gina Raimondo said Monday.

The U.S. export controls were launched in 2022 to counter the use of chips for military applications that include the development of hypersonic missiles and artificial intelligence.

Last year, the U.S. Commerce Department broadened the export controls, sparking protests from China’s Commerce Ministry that the restrictions violated international trade rules and “seriously threaten the stability of industrial supply chains.” 

China said it would take “all necessary measures” to safeguard its rights and interests and urged Washington to lift the export controls as soon as possible.

‘Are we doing enough?’

Asked if the U.S. was planning to further broaden the chip export controls to China, Raimondo said in a news conference in Manila that it was constantly under consideration.

“We look at this every single day,” Raimondo said. “Technology is changing faster than ever, which means we have to wake up every day and ask ourselves, ‘Are we doing enough?’ ”

She said her job “is to protect the American people” and to make sure China cannot access sophisticated U.S. technologies – including semiconductor technology and artificial intelligence technology – that could be used to bolster the Chinese military.

The U.S. would continue to sell semiconductors worth billions of dollars to China, Raimondo said.

“I want to be clear. We have no interest to decouple our economies,” she said, but added, “We cannot allow China to have access, for their military advancement, to our more sophisticated technology.”

‘Ironclad’ relationship

Raimondo said she was sent by President Joe Biden to Manila with a delegation of executives from 22 American companies, which she said plan to invest about $1 billion in the Philippines, Washington’s oldest treaty ally in Asia. The U.S. investments would include training large numbers of Filipinos to attain high-tech skills that could help them land high-salary jobs, she said.

“The U.S.-Philippine alliance is ironclad. It is sustained over 72 years, and we remain steadfast friends and increasingly partners in prosperity,” she said.

Raimondo met President Ferdinand Marcos Jr. and quoted him as saying “he cannot imagine the Philippines’ future without a close bond with the United States.”

“I want to say here today: The feeling is mutual,” Raimondo said. “But President Biden acknowledges we can do more.”

Marcos invited businesses from the U.S., the third-largest trading partner of the Philippines, to invest in more than 198 planned infrastructure projects worth $148 billion.
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