US Inflation Slows to 2.4% in January as Energy Pressures Ease; Core Inflation at Lowest Since 2021

Washington | EcoPulse24

The annual inflation rate in the United States slowed significantly in January 2026, falling to 2.4%, its lowest since May, compared to 2.7% in the previous two months and below market expectations of 2.5%, according to official data released today.

This decline largely reflects statistical base effects as high readings from last year roll out of the annual calculation, alongside a clear easing in price pressures within the energy sector and some key goods.

Energy prices fell by 0.1% year-on-year in January after a 2.3% rise in December, driven by a sharp 7.5% drop in gasoline prices compared to a 3.4% decrease the previous month. Fuel oil prices also dropped by 4.2% after a 7.4% increase. In contrast, natural gas prices continued to rise but at a slower pace, registering 9.8% versus 10.8% in December.

Some durable goods saw deflationary pressures, with used car and truck prices falling by 2% after a 1.6% increase in the previous month, helping to moderate the overall index.

In core components, food price inflation slowed to 3.1% from 2.9% in December, while housing inflation eased to 3% from 3.2%, a key development given the significant weight of housing in the Consumer Price Index basket.

On a monthly basis, the Consumer Price Index rose by 0.2% in January, compared to 0.3% in December, and below market forecasts of a similar 0.3% increase, reinforcing signs of a gradual slowdown in price pressures.

Excluding food and energy, annual core inflation came in at 2.5%, the lowest since March 2021, down from 2.6% the previous month and in line with expectations. On a monthly basis, core inflation rose by 0.3%, up from 0.2% in December, indicating some persistent underlying pressures despite the overall improvement.

These figures come as markets closely watch the trajectory of US monetary policy, with growing debate about the timing and scale of possible rate cuts in 2026 amid mixed signals between slowing inflation and ongoing strength in some real economy components.

EcoPulse24 Analysis:
The slowdown in US inflation to 2.4% and the drop in core inflation to nearly five-year lows indicate that the monetary tightening cycle is bearing fruit in curbing price pressures, especially in energy and durable goods. However, the 0.3% monthly rise in core inflation shows that the downward trend is not yet linear, and the Federal Reserve is likely to remain cautious about a rapid shift toward easing. Economically, this reading supports a 'soft landing' scenario, but markets remain sensitive to surprises in wage or service data, making future rate decisions contingent on the continuation of this trend in the coming months.