This was also the lowest level since May 2025.Concerns about affordability have come to the fore in recent months as price increases in areas such as food have weighed on households and President Donald Trump’s tariffs have rippled through the world’s largest economy.
While the tariffs have not led to a broad increase in inflation, companies have reported higher operating costs. However, many companies have tried to soften the blow by stocking up ahead of the planned levy increases and avoiding fully passing on the additional increases to consumers.
For now, the CPI rose by 0.2 percent on a monthly basis in January, a small decrease compared to the 0.3 percent increase in December.
This was helped by a 1.5 percent month-on-month decline in overall energy costs, partly due to gasoline. Food costs remained 0.2 percent higher than in December, although month-on-month increases have also moderated.
Food prices rose 2.9 percent from a year ago, the report said.
“This is encouraging news for many struggling American families,” said Heather Long, chief economist at Navy Federal Credit Union.
US consumers in lower income brackets have shown reluctance to buy non-essential items, the Federal Reserve noted last month.
“The tariffs have had a clear impact on products like furniture and appliances, but key items in many family budgets are cooling,” Long said.
“Gaso prices, used cars and medical care all fell in January,” she added.
Excluding the volatile food and energy sectors, core inflation was 2.5 percent, slightly below December levels.
While overall inflation has cooled, underlying price pressures, combined with a jobs market that has proven more resilient than expected, could allow the Fed to keep rates steady for a while longer.
Friday’s inflation data caps a week of key economic data, including an employment report that showed stronger-than-expected job growth in January.
The US central bank made three interest rate cuts last year but has postponed further action for now in an effort to bring inflation back to the two percent target set by officials.
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