Inflation and Interest Rates

U.S. consumer inflation cooled to 2.4% in January — a nearly five‑year low — as lower gas prices and cooling housing costs helped pull the CPI down. Item-level swings were large (eggs down 34% year‑over‑year while ground beef and roasted coffee rose about 17%), inflation averaged a 2.6% annualized rate from November–January versus 2.9% July–September, the cooler reading surprised some Fed watchers but most economists still don’t expect a March rate cut, and some warn official shelter data may be artificially low because October CPI was imputed during the government shutdown, with normalization expected by March–April.

The Consumer Price Index increased 2.4% in January 2026 from a year earlier, slightly under the 2.5% rise economists surveyed by FactSet had expected and signaling some further cooling in inflation pressures. The data, released later than usual because of the recent partial federal government shutdown, track price changes across a broad basket of goods and services including food, apparel and other household costs. A 2.4% pace keeps inflation above the Federal Reserve’s 2% target but well below the peaks of the last few years, and will factor into Wall Street bets on the timing and size of future interest-rate cuts. Markets, businesses and workers will now be watching the full report — once details on shelter, goods, and services components are parsed — for signs of whether tariffs and other Trump-era policies are still feeding through to consumer prices or if underlying inflation is stabilizing. The reading also feeds directly into ongoing political fights over cost of living, with both parties using even small moves in CPI to bolster or attack the administration’s economic narrative.