Annual inflation accelerated 2.4% compared to the same time in 2025
The consumer price index (CPI), which is an indicator of inflation, cooled more than expected in January.
According to data released yesterday, prices rose 0.2% in January. Annual inflation accelerated 2.4% compared to the same time in 2025.
Core inflation, which excludes volatile food and energy costs, was up 2.5%, hitting its lowest level since April 2021.
Analysts note that while there is fear that President Donald Trump’s tariffs would hurt consumers and businesses, the slowing inflation shows a different picture.
- Housing costs, which make up one-third of the CPI, rose only 0.2%.
- Energy prices and the cost of used cars and trucks fell 1.5% and 1.8%, respectively.
- Egg prices have dropped 7%.
Meanwhile, airline fares jumped 6.5%, and food prices increased 0.2%.
The overall data suggest that the broader impact of tariffs has remained contained to specific goods, such as furniture and appliances.
Treasury Secretary Scott Bessent echoed this optimism, telling CNBC that he expects inflation to return to the Federal Reserve’s 2% target by mid-year.
But analysts don’t expect the Fed to cut interest rates at its next meeting in March. However, the inflation data has traders raising the probability of a June rate cut to 83%, according to the CME Group’s FedWatch tool.