Inflation wasn’t as bad as economists forecasted in February, as inflation remains well above policymakers’ ideal level, and the prospect of price increases from President Donald Trump’s tariffs threatens further inflation.

How tariffs will impact inflation. Wednesday’s report largely only factored in the 10% additional duties which went into effect on Chinese goods last month, not accounting for the wide sweeping slate of additional tariffs Trump has since announced, including another 10% levy on Chinese goods, according to Bank of America economists Stephen Juneau and Jeseo Park. The 25% tariffs on Canadian and Mexican imports will add a full percentage-point to CPI this year, according to JPMorgan Chase economist Michael Feroli.

January’s CPI report revealed the starkest month-over-month inflation increase in 17 months. Trump blamed that report on “BIDEN INFLATION,” though about a third of the January data came from while Trump was in office. The government calculates CPI inflation by tracking price changes nationally across a predetermined sample basket of goods and services the typical American household may consume in a given month. That differs from the other primary inflation measure, the personal consumption expenditures index (PCE), which tracks how much Americans actually consume in a given month, accounting for spending habits. The Federal Reserve prefers the PCE index given its more malleable nature — for example, January core PCE inflation was an in-line 2.5% as core CPI inflation unexpectedly rose to 3.3%, with the discrepancy due in part to a sudden uptick in egg prices. The Fed, which sets interest rates, has long wanted inflation to come down to 2%, but that has not happened since early 2021, though price increases have moderated significantly from their four-decade peak set in mid 2022 as COVID-19 related supply chain snarls and surging commodity prices following Russia’s invasion of Ukraine sent prices globally skyrocketing.