Annual Inflation Drops To 2.4% In January

U.S. inflation eased more than expected in January, offering tentative relief to consumers and policymakers navigating a still-uncertain economic landscape, new Consumer Price Index data shows.

The U.S. Bureau of Labor Statistics reported Friday that consumer prices rose 2.4% from a year earlier — down from December’s year-over-year figure of 2.7%.

The report, delayed two days by a brief government shutdown, showed inflation cooling as price increases for shelter and food moderated and the energy index declined 1.5%.

On a monthly basis, prices rose 0.2% in January, compared with 0.3% the previous month.

The shelter index — measuring the cost of living in a home — ­ increased 0.2% monthly.

Oxford Economics Lead Economist Bernard Yaros called the January Consumer Price Index “a welcome surprise.”

“In recent years, residual seasonality, along with delayed price adjustments in response to pandemic-era shocks, have led to upside CPI surprises in January,” he told USA Today. “These were no longer on full display this time around, further reinforcing our view (that) tariff-induced price increases on the goods side are largely behind us.

“But we aren’t changing the baseline forecast for monetary policy based on one inflation reading. Lingering distortions from the shutdown in the price data, prospects for solid growth this year and a stabilizing job market will keep the central bank on hold until June.”

The index for owners’ equivalent rent also rose 0.2% in January, as did the index for rent. The lodging away from home index fell 0.1% over the month, according to the report.

Although prices continue to climb, inflation remains well below its 2022 peak and below levels some economists feared after President Donald Trump imposed sweeping tariffs on most U.S. trading partners last year.

Still, concerns about affordability persist.

A poll conducted by The New York Times and the Siena Research Institute released in late-January found that 54% of respondents consider housing unaffordable. Another 31% described it as somewhat affordable, while only 13% said it is mostly affordable.

Core inflation — which excludes food and energy — slowed to 2.5% over the past 12 months, down from 2.6% in December.

Energy prices were mixed. Gasoline prices fell 3.2% in January and are down 7.5% from a year earlier.

Electricity prices climbed 6.3% over the past year and natural gas rose 9.8%, the Bureau of Labor Statistics said.