Today's CPI report is the best inflation news in months. Here's why.

1 day ago 8

The January ostentation reading offered encouraging signs for consumers and the economy, with the Consumer Price Index coming successful beneath Wall Street expectations and falling to its lowest level successful 9 months.

Inflation averaged a 2.6% annualized complaint from November done January, compared with astir 2.9% from July done September. (October's CPI study was canceled owed to the authorities shutdown.) Cooling ostentation could supply immoderate fiscal alleviation for budget-strapped consumers, experts said.

"Inflation fell to the lowest level since May, and cardinal items specified arsenic food, state and rent are cooling off," Heather Long, main economist astatine Navy Federal Credit Union, said successful an email. "This volition supply much-needed alleviation for middle-class and moderate-income families."

Here are 5 takeaways from today's CPI report, which tracks changes successful prices of goods and services crossed the U.S.

Inflation came successful cooler than expected

Friday's study showed that January's ostentation complaint dipped to 2.4% connected an annualized basis, beneath economists' forecasts of 2.5%.

The softer speechmaking came arsenic a astonishment to immoderate due to the fact that the January CPI often comes successful hotter than different months owed to seasonal factors and much accelerated terms changes astatine the commencement of the year, the Federal Reserve Bank of Boston said successful an analysis earlier this month.

To beryllium sure, portion ostentation is cooling, prices proceed their upward trajectory.

"They're going up astatine a slower pace, and that's what we want, but they're inactive going up," Stephen Kates, a fiscal expert astatine Bankrate, told CBS News up of the CPI release.

Core inflation, which strips retired the much volatile nutrient and vigor prices, roseate 2.5% twelvemonth implicit year, a motion that prices stay somewhat sticky.

Some market costs eased

Price hikes astatine the market store are easing, providing immoderate alleviation for a large fiscal symptom constituent for galore American consumers. Food astatine location — a class that tracks nutrient bought astatine market stores and different retailers for depletion astatine location — roseate 2.1% from a twelvemonth earlier, cooler than the wide CPI rate.

Grocery items that dropped successful terms past period compared with a twelvemonth earlier see cheese, caller effect and eggs, with the second declining 34%. To beryllium sure, immoderate foods are inactive experiencing important terms hikes, including crushed beef and roasted coffee, with some items jumping 17%.

Prices astatine restaurants and different eateries roseate 4% past period from a twelvemonth earlier — hotter than the wide ostentation rate.

Lower prices astatine the pump

One standout from Friday's study was vigor prices, which showed a notable deceleration and helped chill the wide ostentation reading, EY-Parthenon elder economist Lydia Boussour said successful an email.

Within the vigor category, gasoline prices dipped 7.5%.

Electricity prices, however, stay sticky, rising 6.3% twelvemonth implicit year. That comes amid an summation successful energy demand, which has driven up consumers' inferior bills.

Price pressures are apt to persist: The U.S. Energy Information Administration forecasts residential energy prices volition emergence astir 4% successful 2026.

Housing costs slowed

Housing costs, categorized arsenic "shelter" successful the CPI, slowed successful January. The class roseate 3% from a twelvemonth earlier, down from 3.2% successful the anterior month.

One caveat: experts accidental that the year-over-year structure figures person been softer successful caller months, apt owed to the lingering effects of the government shutdown in autumn 2025, which disrupted national information collection.

"The Bureau of Labor Statistics did not person information from October, and they had to impute what they deliberation it was going to be, and that has precise apt created immoderate artificially debased numbers connected housing," Kates explained, adding that helium expects numbers to normalize astir March oregon April.

Fed apt to clasp disconnected connected a March cut

Many experts accidental the Federal Reserve volition clasp disconnected connected different complaint chopped astatine its March meeting, adjacent though today's CPI study showed ostentation inching person to the cardinal bank's extremity of a 2% yearly rate.

While January's CPI information volition beryllium "welcome quality for the Federal Reserve," determination whitethorn beryllium concerns astir immoderate information distortions remaining from past fall's authorities shutdown, noted Bernard Yaros, pb economist astatine Oxford Economics, successful a Friday report.

The Fed volition besides apt beryllium monitoring the labour marketplace for signs of stabilization, helium added. Oxford is forecasting 2 complaint cuts successful 2026, astatine the Fed's June and September meetings.

Edited by Aimee Picchi

In: