U.S. Inflation Cools Further in January, Supporting a Patient Fed

U.S. consumer inflation continued to ease in January, with headline CPI rising 0.2% on the month and 2.4% from a year earlier, down from 2.7% in December and slightly below economists’ 2.5% consensus. Core CPI, excluding food and energy, climbed 0.3% on the month and 2.5% over 12 months, the lowest since March 2021.

Shelter rose 0.2% and remained the largest driver of the monthly gain, while food prices increased 0.2% overall, with food at home up 0.2% and food away from home up 0.1%. Those moves were partially offset by a 1.5% decline in the energy index, helping to cap the headline number.  

For the Federal Reserve, the prints reinforce the narrative of gradual disinflation without yet delivering a clean return to its 2% target, supporting expectations that policymakers will hold rates at 3.50%–3.75% through spring and consider cuts later in 2026 if the trend persists.  

Markets initially treated the cooler‑than‑expected data as incrementally dovish, with futures nudging up odds of a first cut in the summer and equities reversing early losses as investors bet the Fed can continue easing without reigniting inflation.