Inflation in the United States experienced a notable slowdown in January 2026, with the consumer price index (CPI) rising by just 2.4%. This figure is lower than the anticipated 2.5% and marks a decrease from the 2.7% increase observed in both November and December. The data, released by the Bureau of Labor Statistics, provides a glimmer of financial relief for American households as they navigate rising prices.
The report’s release was slightly delayed due to a partial government shutdown, but it arrives on the heels of a jobs report indicating unexpected strength in the labor market. The reported inflation rate is the lowest since May of the previous year. Core CPI, which excludes the more volatile categories of food and energy, recorded a year-over-year rise of 2.5%, closely aligning with forecasts, but slightly lower than the previous 2.6% increase.
Energy Prices Reflect Mixed Trends
While the overall inflation rate showed a cooling trend, energy prices exhibited varied movements. Over the past year, energy costs declined by 0.1%, with gasoline prices decreasing significantly by 7.5%. Conversely, natural gas prices surged by 9.8%, contributing to the complexity of inflation dynamics.
This week also revealed insights into the job market, with the Bureau of Labor Statistics releasing a rescheduled employment report. The data showed that the US economy added fewer jobs in 2025 than previously reported, but January’s job growth exceeded expectations. The unemployment rate fell as labor force participation increased, reflecting a gradual improvement in employment conditions.
Nicole Bachaud, an economist at ZipRecruiter, noted the challenges faced in the labor market, stating, “The 181,000 jobs that were added across 2025 really starkly show how challenging the labor market was and how little movement on either side there really has been as both employers and workers were stuck in place and clinging to stability.”
Interest Rate Outlook Remains Steady
In light of the new inflation data, members of the Federal Open Market Committee opted to maintain interest rates during their January meeting. Following the release of the CPI report, the CME FedWatch tool indicated a roughly 90% probability that the Federal Reserve would keep rates unchanged in their upcoming meeting. This aligns with previous expectations prior to the data’s publication.
Skyler Weinand, chief investment officer of Regan Capital, remarked on the CPI report’s impact, stating, “Friday’s delayed CPI for January was muted and in-line with expectations and it won’t increase the likelihood of a rate cut within the next few months largely because of Wednesday’s blowout employment numbers, which threw ice cold water on any hopes of a near-term rate cut.”
As the economic landscape continues to evolve, analysts and policymakers will closely monitor inflation trends and labor market performance. Further updates regarding these developments are expected in the coming weeks.
