United States: Inflation Slows Again

The monthly increase in the headline CPI came in slightly below expectations, as the consensus had anticipated a 0.3% gain.

One of the most notable developments was the decline in energy prices, particularly gasoline and fuel oil. This reflects the decrease in crude oil prices observed in the first month of the year. However, as with crude oil, gasoline prices in the United States have begun to rise again in recent weeks. Food prices continued to increase, but the 0.2% gain represents a significant slowdown compared with the sharp 0.7% jump recorded in December. The deceleration was especially pronounced in restaurant prices, where the modest 0.1% increase was the smallest since last September.

Excluding food and energy, the monthly increase in core CPI was broadly in line with expectations, although it was still the strongest since August. Prices for core goods (excluding food and energy) were unchanged for a fourth consecutive month. This price stability is good news for Americans, especially since last year’s tariff measures could have driven goods prices much higher. It appears that importers are still reluctant to raise prices for consumers. However, developments over the coming months will need to be monitored closely, as certain components of the Producer Price Index and other indicators of online purchase prices suggest somewhat stronger upward pressures. The core goods index also benefited from a 1.8% decline in used vehicle prices—the largest monthly drop since February 2024. Other components, however, showed more momentum, including appliances (+1.3%), audio and video equipment (+2.2%), computers (+3.1%), and computer software and accessories (+1.4%).

On the services side, price growth accelerated slightly in January (+0.4%) compared with December (+0.3%). Housing-related prices rose at a somewhat slower pace, and hotel prices declined. By contrast, airfares—a highly volatile component—jumped 6.5%, marking their strongest monthly increase since the spring of 2022. Overall, however, the trend in services inflation continues to show a gradual moderation, offsetting the potentially stronger growth in goods prices.

Headline inflation continues to slow and, in January, posted its weakest year-over-year increase since May 2025. Although price growth remains slightly above the Federal Reserve’s target for now, it is clear that inflationary pressures are lower than many feared following the tariff announcements from the White House. For the moment, the situation remains consistent with the Federal Reserve maintaining its current policy stance in the months ahead, with additional policy rate cuts expected later in 2026.