WASHINGTON, April 9 (Reuters) - U.S. inflation increased as expected in February and likely rose further in March amid the war with Iran, a trend that is expected to discourage the Federal Reserve from cutting interest rates for a while.

M/M vs. +0.3% consensus and +0.4% prior, according to data released by the Bureau of Economic Analysis on Thursday.

The Commerce Department on Friday released the February 2026 PCE inflation report, which showed the Federal Reserve's preferred inflation gauge remained stubbornly high for consumers.

The personal consumption expenditures index report by the Bureau of Labor Statistics was released on Thursday morning.

The Fed’s preferred inflation gauge, the core PCE price index, climbed 3.0% year-over-year in February. This figure was consistent with the forecast and reflected a slowdown from January's 3.1% reading. On a monthly basis, core PCE rose 0.4%, as expected.

The latest government release, echoed across major financial outlets, put the month-on-month PCE increase at roughly 0.4%. According to the Bureau of Economic Analysis, the PCE price index rose 0.4% in February and the 12‑month change moved up to about 2.

Inflation would be a lot closer to the Federal Reserve's goal of a 2% annual rate if the stock market wasn't doing so well, according to a new analysis.

The Federal Reserve is faced with a very difficult decision that could make or break the stock market.

The core Personal Consumption Expenditures price index rose 3% over 12 months through February, remaining above the Federal Reserve's 2% target for nearly five years.

PCE and CPI—hit this week. See forecasts, what core inflation signals, and how oil prices may sway Fed rate cuts.