Annual inflation cooled to 2.4% in January, an eight-month low
By Alicia Wallace, CNN
(CNN) — A Friday the 13th economic report appeared to deliver some fortunate news: Annual inflation slowed significantly.
However, certain details of the latest Consumer Price Index presented a more sobering picture: Some price pressures aren’t just persisting, they’re accelerating.
The January CPI report capped off a week of new data that underscored a seemingly incongruent US economy: Consumer spending petered out as debt and meager pay gains weighed, but unexpectedly strong hiring fueled some optimism for the future.
“This is one of those tough weeks where spreadsheets and data are cheery, but households still aren’t,” Tyler Schipper, an associate professor of economics at the University of St. Thomas, in St. Paul, Minnesota. “Even a good inflation report from the perspective of economists is higher prices, and that is not going to sit well with a lot of households.”
Here’s a rundown of what the January inflation data shows, what it means in the context of the broader economy and, especially, whether cost of living concerns are abating.
The main monthly numbers
Consumer prices rose 2.4% in January from the year before, marking an eight-month low and a sharp cooldown from the 2.7% rate notched in December, according to the Bureau of Labor Statistics’ CPI report that landed on Friday, two days late because of the brief and partial federal shutdown that ended last week.
On a monthly basis, prices rose 0.2%, slower than the December pace and helped by tumbling gas prices, the continuation of a years-long slowdown in housing-related costs and a more moderate increase in food prices.
Friday’s monthly reading came in better than projected as economists had forecast a 0.3% increase.
Economists had expected the annual rate to slow to 2.5%. But inflation came in even slower, at 2.4%, helped by more favorable prices at the pump grocery store. Math played a role as well – because prices spiked so much in January 2025, this January looked even better by comparison.
The underlying trend
The core CPI gauge – a closely watched measurement that excludes volatile food and energy prices – also saw its annual rate of inflation ease.
Core CPI slowed to 2.5%, its lowest rate since March 2021, right before the pandemic-era inflationary spike.
But the underlying trajectory went in a different direction: The core CPI index accelerated to a five-month high of 0.3% from December’s 0.2%.
“While mild topline inflation is encouraging, it would be premature to declare victory on inflation,” Joe Brusuelas, RSM US chief economist, wrote in an email to CNN, “as one can clearly observe beneath the headline sharp turn of the year pricing and sustained increase in tariff-sensitive goods.”
This story is developing and will be updated.
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