Inflation cooled at the start of the year. The Consumer Price Index rose 2.4% in January compared to a year ago, according to the Bureau of Labor Statistics. That figure came in below the 2.5% annual rate economists had forecast. It was also down from December’s 2.7% reading.
The 2.4% rate is the slowest pace of inflation since May 2025.
Core inflation, which excludes volatile food and energy prices, also eased. It slipped to 2.5% year over year in January from 2.6% the previous month. That marks the lowest core reading since March 2021.
The CPI tracks changes in the prices of a broad basket of goods and services typically purchased by consumers. These include essentials such as food, apparel, housing and transportation.
“The fact that price pressures in January were contained is notable given the usual upward pressure from annual price resets and seasonal effects – factors that have tended to push January inflation prints higher in recent years,” Lydia Boussour, senior economist at EY-Parthenon, said in a report.
Food prices rose slightly in January. Shelter costs increased 0.2% for the month. The rental cost of owned housing was up 3.3% compared to the same time last year.
Some grocery items remain elevated. Ground beef rose 17.2% over the past year. Coffee climbed 18.3%.
However, egg prices have continued to ease. They are down more than 34% from a year ago. Egg prices had surged during the pandemic amid avian flu outbreaks.
Energy prices provided some relief. Gasoline prices declined 7.5% annually. Overall energy costs fell 1.5% in January. Car insurance rates also declined.
The inflation report was delayed due to the partial government shutdown that ended earlier this month.
The new data follows a stronger-than-expected January jobs report. The Labor Department said employers added 130,000 jobs last month. The unemployment rate edged down to 4.3%.
While the January CPI data points to cooling price pressures, not all inflation measures are moving in the same direction. The Federal Reserve’s preferred gauge, the Personal Consumption Expenditures index, remains near 3%. That is still above the central bank’s 2% annual target.
The latest inflation numbers arrive as debate continues in Washington over tariffs and their impact on consumer prices, local businesses and farmers. A study by the Federal Reserve Bank of New York found that nearly 90% of the economic costs associated with tariffs have fallen on U.S. businesses and their customers.
For now, January’s report suggests inflation is easing gradually. However, many Americans still feel the strain of higher prices in key areas such as food and housing.