U.S. consumer prices rose 2.4% annually in January, below expectations, signaling potential relief in the country’s prolonged inflation battle.
The Bureau of Labor Statistics reported inflation cooled 0.3 percentage point from December, returning to levels seen shortly after April 2025 tariff announcements.
Core CPI, excluding food and energy, increased 2.5%, the lowest since April 2021, matching economists’ forecasts.
On a monthly basis, headline inflation rose 0.2%, while core prices gained 0.3%, broadly in line with projections.
Shelter costs rose just 0.2%, lowering annual housing inflation to 3%. Energy prices fell 1.5%, and used vehicle prices dropped 1.8%.
Food prices increased modestly, while airline fares jumped 6.5%. Egg prices fell 7% in January and remain sharply lower year-over-year.
Markets reacted calmly, with Treasury yields declining. Traders raised the probability of a Federal Reserve rate cut in June to roughly 83%.
Despite cooling inflation, price growth remains above the Fed’s 2% target, leaving policymakers cautious as mixed economic signals persist.
